Empowering enabling organizations to bridge the credit gap

How strengthening the capacities of nonprofits supporting women’s entrepreneurship development can drive financial access in India

AUTHORS

Aurea Dutta, Eknoor Kaur

A growing force is fueling India’s economic resilience — women microentrepreneurs. They sell homemade snacks on street corners, manage backyard poultry farms, run stitching units from their verandas, and operate small shops in narrow alleys. These women are not just supplementing family incomes; they are often the primary engines of financial stability in their households. Yet, women entrepreneurs in India remain largely invisible to formal finance systems, with almost 87 percent of them self-financing, and many locked out of opportunities to grow, invest, and formalize their businesses.

While the Indian government and financial institutions have introduced various schemes to promote financial inclusion, such as Pradhan Mantri Mudra Yojana, Stand-Up India, and Credit Guarantee Fund Trust for Micro and Small Enterprises, a notable 35 percent gender credit gap persists. Many women entrepreneurs also lack land titles or business registration documents, which are often prerequisites for formal lending, and face implicit gender bias among lenders. These structural barriers, combined with limited awareness of support schemes and rigid traditional lending models, continue to restrict access to formal finance for many.

*Accion Advisory team members Amit Gupta and Eknoor Kaur with women entrepreneurs at the Prema Krishna Cloud Kitchen*

Prema Krishna Cloud Kitchen is a women-led, health-focused food enterprise based in Bengaluru. It was founded by five women who pooled their resources and entrepreneurial energy to start a cloud kitchen catering to the growing demand for nutritious meals in the city. Their initial capital was raised through personal gold loans and seed funding from Project Concern International (PCI India), a Delhi-based nonprofit supporting women’s economic empowerment.

Today, the collective earns an average daily net profit of INR 1,000–1,500 (USD 12-18) and shows strong potential for growth. However, like many women-led ventures in India, it faces significant barriers to securing financing that can help them scale operations, including:

Fragmented Self-Help Group affiliation: The women come from different Self-Help Groups, a typical source of microcredit for women in India. However, Self-Help Groups are reluctant to extend loans to individuals outside their core group or to support larger ticket-size loans required for collective enterprises.
Low awareness of credit options: The women lack knowledge about alternative credit products and financial institutions that could support their business expansion. This information gap has led to hesitancy and low confidence in borrowing from formal sources.
Institutional reluctance to lend to women collectives: Financial institutions often perceive women’s collectives as high-risk due to their informal structures, weak collateral, and governance concerns, making them hesitant to extend credit and limiting growth opportunities for enterprises like Prema Krishna Cloud Kitchen.

This disconnect is a missed economic opportunity for these women entrepreneurs. To address the issue, credit enablement support from non-governmental organizations (NGOs) is emerging as an important solution. A 2024 study by SEWA and MSC found that entrepreneurs supported by NGOs, on average, accessed credit 30 to 40 days faster and reported higher loan repayment rates than entrepreneurs operating without support. These civil society organizations play a pivotal role in scaling sustainable finance by making credit more accessible for women at the grassroots level.

NGOs have historically played a central role in driving financial inclusion, particularly by organizing women’s groups and enabling access to credit through Self-Help Groups. Their deep community ties and trust-building abilities made them ideal facilitators. However, many lack the technical capabilities to support women entrepreneurs in accessing formal credit, such as helping to build digital footprints, improve credit histories, and leverage digital data to become visible to lenders, highlighting the need for targeted capacity-building and new partnerships within the lending ecosystem.

NGOs as catalysts for inclusive and affordable credit access

NGOs’ strengths lie in their vital role in translating financial inclusion policies into on-ground results, especially for women entrepreneurs operating in informal or semi-formal sectors. They help bridge the awareness gap by conducting workshops and community sessions, explaining available credit schemes in accessible formats and local languages. They establish trust, often serving as the first institutional touchpoint for rural and semi-urban women. They help women budget, calculate their business cashflows, evaluate their business credit needs, estimate their capacity to pay, prepare loan documents, and counsel them to repay on time, providing personalized support that banks and NBFCs often cannot afford to offer.

NGOs are also well-positioned to encourage financial institutions to design women-friendly credit products, like group loans, flexible repayment models, and low-collateral lending mechanisms. Many NGOs collaborate with digital lenders and fintech platforms (e.g., Mahila Money and Kinara Capital) to offer unsecured or small-ticket loans, expanding access for women who lack formal banking footprints.

Vijaya’s story

Aurea Dutta with Vijaya and an employee from Hand in Hand — Aurea Dutta (center) with Vijaya (right) and an employee from Hand in Hand (left)

Vijaya manages a modest but thriving store with her husband in Kanchipuram district, Tamil Nadu, while also taking care of their household. Married while still in junior college, she pursued higher education even as her husband struggled to find steady employment. Their turning point came when they connected with Hand in Hand India, an NGO committed to empowering microentrepreneurs. The organization provided critical support through a structured entrepreneurship training program covering inventory management, customer service, and basic financial literacy. More importantly, Hand in Hand helped them identify and access a low-interest business loan with suitable repayment terms via a Self-Help Group, protecting them from informal debt traps. The NGO also assisted with business planning, advising on product mix, store setup, and customer targeting strategies. Thanks to this guidance, Vijaya and her husband were able to turn their small venture into a stable source of income, gain financial independence, and inspire other women in their community to pursue entrepreneurship with confidence.

To help NGOs build on their strengths and enhance their level of support to small businesses, JPMorganChase is supporting Accion to equip them with tools and resources to build their capacity and effectively facilitate formal credit access for entrepreneurs like Vijaya. While India’s credit landscape is gradually becoming more inclusive, the journey remains unfinished — especially for women-led micro and small enterprises. Government policies and push have laid a strong foundation, but real change requires trusted, grassroots intermediaries who understand the socio-economic realities of women entrepreneurs.

NGOs fill this role with unmatched credibility and proximity, and we are excited to work with our cohort of NGO partners on this initiative to support women-led businesses and help drive gender-inclusive economic growth.