In FY’20, more than 77 per cent of borrowers are first generation entrepreneurs: Survey

Nearly 77.6 per cent of the borrowers in financial year 2020 were first-generation entrepreneurs, of which 14.5 per cent moved out of the informal sector to join mainstream businesses, according to a survey.

The pre-Covid-19 survey, conducted by non-banking finance company NeoGrowth Credit, also found that 51.4 per cent of the interviewees were first time borrowers.

“First-time borrowers now have more and more confidence, are seeking loans and building credit history. We also found that people who took loans have used it to grow the business, and as the businesses grew, they hired more staff,” Piyush Khaitan, Founder and Managing Director of NeoGrowth Credit told BusinessLine.

“Even small loans create jobs, which is important. Further, even micro businesses are adopting digital payment modes such as credit cards, UPI and QR code-based payment modes,” he added.

Nearly 84.1 per cent of the customers, who took part in the survey, registered an increase in revenue post availing a loan. The loans were mostly availed for working capital.

The company lends 27 different industry verticals, with grocery, chemists, apparel, café and restaurants, spa and saloons and petrol pumps topping the list. The average ticket-size of the loans ranged between ₹2 lakh and ₹50 lakh.

NeoGrowth conducted the study across a base of more than 17,000 customers for the fiscal ended March 31, 2020. The sample was collected across Mumbai, Pune, Delhi, Lucknow, Ahmedabad, Bengaluru and Hyderabad.

NBFC are becoming important in India as banks are generally hesitant to give loans to entrepreneurs who lack formal education.

The company, which had earlier raised funds from Omidyar Network, Aspada Investment Company, Khosla Impact, Accion Frontier Inclusion Fund (managed by Quona Capital), IIFL Seed Ventures Fund and Leapfrog Investments, has ₹1,340 crore of assets under management as of March 31, 2020.