Raising capital the biggest challenge for women-led MSMEs in India: Indifi
The number of women-led MSMEs in India has grown from 2.15 billion to 1.23 million in just a decade. But they face a $158 billion funding gap and rely largely on informal sources, according to a survey by Indifi Technologies, a MSME lending platform, titled “Understanding what women-led MSMEs want.”
The survey was launched to understand the needs and challenges of women-led businesses and enable greater inclusivity in the credit space so they can thrive and scale.
The survey, which included over 250 women entrepreneurs, found that raising capital remains the number one challenge they face when it comes to running a business, followed by managing the business operations and securing a vendor/ Delivery. Digging further into these barriers, respondents felt that starting and scaling their business is difficult for female SMEs, with raising the necessary capital being the common denominator at each stage. 61% of respondents also believe a lack of business and financial experience contributes.
To address some of the challenges, most entrepreneurs indicated that they still rely on banks for their financing needs; But years of business, poor credit, and lack of property are the big hurdles when it comes to getting their loans sanctioned.
Siddharth Mahanot, Co-Founder and COO of Indifi Technologies, said: “Indifi’s business is focused on driving the financial integration of MSMEs into the lending ecosystem; empower them to thrive and scale their business. A significant portion of our loan disbursements goes to female entrepreneurs, but we are aware that the credit gap to be bridged is still large. This survey aims to unravel the nuances of the unique challenges faced by women entrepreneurs.”
To fill some of the gaps and drive inclusion of creditworthy but underserved companies, Indifi has enabled access to credit through its verticalized and ecosystem-based approach by partnering with leading technology aggregators such as Amazon, Flipkart, Zomato, Swiggy, Google Pay. FirstData and banks & NBFCs as lending partners. By leveraging alternative datasets available in these leading technology aggregators, Indifi mitigates underwriting challenges and improves access to capital for micro MSMEs.
To further support women-led MSMEs, Indifi recently partnered with Facebook in its Small Business Loan Initiative, which extends a 0.2 percent interest rate cut to women-owned businesses.
The survey also revealed that when it comes to exploring digital credit alternatives, respondents believe that the lack of awareness and technical know-how is why digital credit is not widely explored as a lending option by other women entrepreneurs.
decoding the intersectional challenges through the gender lens; 45 percent of female entrepreneurs believe that a male co-founder makes running the company easier. They also shared that the top three qualities a male co-founder brings to a company are leading a team, interacting with vendors and customers, and securing capital/funds.
Women entrepreneurs were quite comfortable using digital tools and the biggest use of digital technology in their businesses was internet banking, followed by social media marketing and the use of online marketplaces. According to Indifi’s own insights from its client base, 50 percent of loans to female SMBs come from e-commerce, travel and restaurant segments that rely heavily on digital technology to run their businesses.
A wide range of entrepreneurs at different stages of their business took part in the survey. The majority of respondents were between 31 and 50 years old and a large proportion of respondents have been in business for 2-4 years.
Of the more than 41,000 loans Indifi disburses in more than 400 cities, 20 percent are women entrepreneurs, of whom 25 percent are first-time borrowers, and 25 percent are from Tier II, III, and IV cities.