71% of Indian SMEs sought external funding in 2024: CPA Australia Survey

Rising costs continue to be a challenge for many small businesses, with 40% of MSME (micro, small and medium enterprises) respondents citing increasing expenses as their biggest concern, according to a survey by the professional accounting body CPA Australia.

The survey, which collected responses from 4,236 small businesses across 11 Asia-Pacific markets in November and December 2024, including 507 from India, found that 72% of Indian small businesses sought external funds last year; 34% cited rising costs as the primary reason for needing finance, while 32% attributed it to reasons relating to business survival.

Founded in 1886, CPA Australia represents more than 175,000 members working in over 100 countries around the world. Each year, the organisation conducts research on the key trends shaping small businesses in the Asia-Pacific region. The 2025 edition of the Asia-Pacific Small Business Survey provides data to assist small business owners, advisers and policymakers in their decision-making processes.


Commenting on the survey results, Prafulla Chhajed, a certified practicing accountant with CPA Australia, says that access to finance remains a critical need for small businesses in India. “In 2024, over 71% of Indian SMEs sought external funding, well above the survey average, primarily to drive business growth. While traditional banks remain the main source for 38% of respondents, there is increasing demand for faster, more flexible credit options. Encouragingly, new solutions are emerging.”

Chhajed adds that tailored financial products like SME-specific credit cards and government-backed initiatives, such as collateral-free loans of up to Rs 100 crore for MSMEs under the Union Budget 2024-25, are improving access to capital. Financial literacy, he says, remains an essential component. “Financial inclusion now is no longer just about access to capital; it is also about ensuring small businesses have the knowledge, tools, and support to grow confidently and sustainably,” he states.

Among the small businesses that sought external funding last year, 43% indicated that obtaining financing was easy or very easy. This trend is expected to continue this year, with 39% expecting smooth access to finance.

Among other highlights, the survey showed that India’s small businesses continue to be among the most focused on innovation. Chhajed states that nearly 80% of businesses are planning to launch new products, services, or processes in 2025, and a sharp increase is being seen in investment in technologies like AI. “With one of the youngest entrepreneur bases in the region, India’s SME sector is well-positioned to drive sustained growth and innovation. Overall, these trends highlight a forward-thinking, growth-oriented sector that is not only embracing new technologies but also focusing on scalability, job creation and global expansion,” he highlights.

Another notable finding is the strong hiring trend. In 2024, 46% of Indian small businesses reported increasing the size of their workforce, making them the leading job creators among the surveyed Asia-Pacific markets. An even better result is expected this year, with 64% planning to hire more employees, well above the survey average of 45%.

People remain a key asset for India’s small businesses, with good staff emerging as their most influential positive factor in 2024. India also has a high proportion of small business owners or leaders under 40, and younger entrepreneurs are more likely to be running businesses that are growing and creating new jobs, it stated.

The survey also reflected how the technology uptake by Indian small businesses is consistent with the Asia-Pacific average. According to the survey, 26% of such businesses heavily invested in AI in the past year. This shift is enabling them to optimise operations, enhance customer experiences, and streamline processes. Additionally, over 83% of these businesses now generate more than 10% of their revenue through digital, online, or mobile payments, and more than 86% are using social media for business purposes.

“Adopting AI is critical for SMEs to stay competitive in a rapidly evolving market. It helps businesses automate tasks, make data-driven decisions, and create more personalised customer interactions—key advantages in today’s fast-paced, tech-driven economy. However, with greater digital integration comes increased exposure to cybersecurity risks. The survey revealed that 43% of SMEs still reported financial or time losses due to cyber incidents. This highlights the need for businesses to strengthen their cybersecurity measures,” Chhajed cautions.

On the bright side, the survey stated that India’s small business sector is one of the most dynamic and optimistic in the Asia-Pacific. Survey findings revealed that 78% of Indian small businesses grew last year, reflecting the country’s strong post-pandemic recovery. “This momentum has been driven by a vibrant business environment and a strong emphasis on innovation and rapid digital transformation,” Chhajed emphasises.