Micro biz has a harder time securing loan to start up

Bank lending to first-time micro-entrepreneurs has plummeted, signalling tighter credit conditions for small businesses already struggling with cash flow pressures and trade turmoil. In the first six months of the fiscal year, a key central scheme to support such lending managed to sanction just about 12% of what was sanctioned in the entire previous fiscal year, official data showed.

- Manas Pimpalkhare

The Prime Minister's Employment Generation Programme (PMEGP), now in its 17th year, provides loan subsidies to traditional artisans and unemployed youth to float small non-farm ventures. The Centre covers up to 35% of the project cost, with the rest financed by banks. This year, the scheme sanctioned just ₹1,455 crore till 7 October against ₹12,316 crore in all of FY25, data from the micro, small and medium enterprises ministry showed.

In FY25, 108,923 projects were financed with loans of ₹12,316 crore, while 165,725 projects were financed with loans of 17,759 crore in FY24. While sanctioning tends to rise in the second half of the fiscal year, industry stakeholders termed this year's decline as "surprisingly low".