Raising capital remains the biggest challenge for women led MSMEs in India: Indifi Study

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“This survey aims to decode the nuances of the unique challenges that women entrepreneurs face. We aim to leverage technology further and foster relevant lending partnerships to solve these challenges meaningfully and make positive strides bridging the abysmal credit gap from a gender lens.” - Siddharth Mahanot, Cofounder & COO, Indifi Technologies

March 2022 : Indifi Technologies, India’s leading ecosystem-lending platform for MSMEs, has recently released its findings from the survey titled “Understanding What Women-Led MSMEs Want”. The number of women-led MSMEs in India has jumped from 2.15 lakh to 1.23 crore in just a decade. However, they face a finance gap of $158 bn and largely rely on informal sources. The survey was launched to understand needs and challenges of women led businesses and enable greater inclusivity in the lending space for them to flourish and scale.

The survey that received participation from over 250 women entrepreneurs discovered that securing capital remains the biggest challenge that they face in terms of running a business, followed by managing business operations and securing a credit period from vendors/suppliers. Expanding further on these roadblocks, respondents were of the opinion that starting and scaling their business is difficult for women SMEs, with raising the requisite capital being the common denominator in each stage. 61% of respondents also believed lack of business and finance experience is a contributor to this.

To address some of the challenges, most entrepreneurs said they still rely on banks for their financing needs; but years of business operation, insufficient credit history, and lack of property ownership are the big hurdles when it comes to getting their loans sanctioned.

To bridge some of the gaps and drive inclusion of the creditworthy yet underserved businesses, Indifi has been enabling accessibility to credit through its verticalized and ecosystem-based approach by partnering with leading tech aggregators such as Amazon, Flipkart, Zomato, Swiggy, Google Pay, FirstData, and Banks & NBFCs as lending partners. By leveraging alternate data sets available in these leading tech aggregators, Indifi mitigates the underwriting challenges and enhances access to capital for micro MSMEs.

To further support women-led MSMEs, Indifi recently joined hands with Facebook in their Small Business Loans initiative, which extends a 0.2% reduction in the rate of interest to women-owned businesses.

Siddharth Mahanot, Cofounder & COO, Indifi Technologies, said, “At the core of Indifi’s operations is the goal of driving financial inclusion for MSMEs in the lending ecosystem; empowering them to flourish and scale their business. We do this through a unique ecosystem-based approach to lending, tapping into digital ecosystems MSMEs are already present at and solving for the need gaps of lack of collateral, digital know-how, operational years via our end-to-end digital underwriting. A significant volume of our loan disbursements happen to women entrepreneurs, yet we are cognizant that the credit gap to be bridged still remains large. This survey aims to decode the nuances of the unique challenges that women entrepreneurs face. We aim to leverage technology further and foster relevant lending partnerships to solve these challenges meaningfully and make positive strides bridging the abysmal credit gap from a gender lens.”

The survey further uncovered that in terms of exploring digital lending alternatives, respondents believe that the lack of awareness and technical know-how is the reason why digital loans are not commonly explored as avenues for credit amongst other women entrepreneurs.

Further decoding the intersectional challenges through the gender lens; 45% of the women entrepreneurs believe that having a male co-founder makes running the business easier. They also shared that the top 3 attributes that a male co-founder brought to the table in a business is, managing a team, interacting with vendors and clients, and securing capital/funds.

Women entrepreneurs displayed a fair sense of comfort in using digital tools and the top use of digital technologies in their businesses was for internet banking, followed by social media marketing and using online marketplaces. In Indifi’s own findings from its customer base, 50% of the loans for women SMEs come from e-commerce, travel, and restaurant segments which heavily rely on digital technology for their operations.

The survey received participation from a diverse set of entrepreneurs at different stages of their businesses. A majority of the respondents were between the ages of 31 and 50, and a large portion of respondents have been operating their businesses for the past 2-4 years.

The ecosystem based lending has enabled Indifi to cater to a large base of underserved businesses, including women led businesses, thereby driving financial inclusion. Out of the 41000+ loans disbursed by Indifi in 400+ cities, 20% are women entrepreneurs of which 25% are first-time loan borrowers, and 25% are from Tier II/III/IV cities.

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