Micro, small businesses witness moderation in credit growth: Survey

Credit growth for micro and small businesses slowed to 10.1 per cent in November 2024 from 15.5 per cent in May 2024, said a survey. However in case of large businesses, the credit growth remained stable while for medium-sized firms it rose to 20 per cent in November from 12.6 per cent in June, said the third edition of the bi-annual MSME Sampark Report by Ugro Capital and Dun & Bradstreet.

The survey is based on the analysis of over 45,000 enterprises during 2021-2024 across seven sectors.

"Among the over 45,000 MSMEs analysed, the light engineering, electrical equipment, food processing, and chemical sectors emerged as the largest borrowers in the first three quarters of 2024. Interestingly, over the past six months, B2C businesses have taken on less new debt than B2B businesses, except in the auto components and hospitality sectors," it added.


Credit growth in Udyam-registered MSMEs slowed from 61 per cent in FY22 to 22 per cent in FY23. It inched up marginally to 23 per cent in FY24.

"Loan disbursements have moderated in 2024, but the rise in working capital loans highlights a growing reliance on short-term financing. This shift reflects the challenges businesses face in long-term planning amid economic uncertainty," a release said.

It further said, around 64 per cent of micro, small and medium enterprises (MSMEs) resumed operational activities post-pandemic, with 54 per cent reporting a growth of over 10 per cent year-on-year, underlining the sector's strong momentum.

Shachindra Nath, Founder & Managing Director - UGRO Capital, said "We see moderation in total loan disbursement in recent quarters, a trend reflecting more conservative lending practices across the industry. While this could be attributed to stricter risk assessments, it also presents an opportunity for NBFCs to play a more strategic role in bridging the credit gap.