Young entrepreneurs in India are rising and hold immense significance for the nation’s future leadership and overall growth. In recent years, there has been a notable surge of talented individuals who are entering the world of Micro, Small, and Medium Enterprises (MSME) businesses. This wave of young entrepreneurs has brought fresh perspectives, innovative ideas, and an unwavering determination to succeed.
There are more than 63 million MSMEs in India which is also a major job driver for the nation. MSME is the largest employment-generating sector after agriculture. According to a report from India Brand Equity Foundation (IBEF), in 2021-22, MSMEs created over 93 lakh jobs, accounting for 42% of all new jobs created in the country. This is expected to continue in the years to come as the MSME sector continues to grow.
Every year, many young entrepreneurs under the age of 30 begin their entrepreneurial journey. With advancing technologies like the evolving tech infrastructure and digital access, they have increased opportunities to explore new ventures, create employment opportunities, and contribute to the country’s economic development. These dynamic individuals leverage technology to their advantage, harnessing its potential to drive growth and positive impact.
However, despite their potential, young entrepreneurs in India face distinct challenges, especially when it comes to securing funding for their ventures. As part of this MSME Day, we discuss young entrepreneurs’ struggles in India, especially while accessing funds. In 2018, the theme of MSME Day was the “Youth Dimension”. The theme’s focus was the contribution to the creativity and entrepreneurship of young entrepreneurs. It also highlighted the importance of developing a supportive environment for young entrepreneurs to start and expand their businesses.
In this blog, we highlight how NBFCs have emerged as valuable partners in supporting the aspirations of young entrepreneurs in India, providing them with flexible and accessible financial solutions tailored to their unique needs. Through collaboration with NBFCs, young entrepreneurs can overcome financial barriers, receive mentorship, and gain the necessary resources to drive their businesses forward, thus contributing to India’s entrepreneurial ecosystem and overall economic growth.
Young entrepreneurs in India face a distinct hurdle when it comes to acquiring financing support for their ventures. Traditional lenders, such as banks and NBFCs, often hesitate to take risks on individuals with limited experience and shorter credit history. Despite their passion and potential, these young visionaries face several challenges in growing their businesses, including:
One significant challenge young entrepreneurs face in India is the need for collateral. In the initial years of their entrepreneurial journey, MSME entrepreneurs lack access to collateral and young entrepreneurs are more likely to be in this position. This limitation makes it difficult for them to meet the requirements set by traditional lenders, who often demand tangible assets as security.
Young entrepreneurs in India may not have an extensive credit history, which poses another obstacle when seeking financial support. Financial institutions traditionally heavily relied on credit scores and history to assess borrowers’ creditworthiness, and many, especially banks, continue to do so. However, young entrepreneurs who are just starting will likely not have a credit history or demonstrated repayment track record.
Young entrepreneurs are typically starting their businesses with little to no experience. They may need more time to build up savings or accumulate sellable assets. This can make it difficult for them to source capital to start their businesses. Banks and other financial institutions may be reluctant to lend money to young entrepreneurs with limited experience.
To address this gap, alternative financing options have emerged. NBFCs and fintech platforms are vital in providing tailored financial solutions for young entrepreneurs. These entities recognise young entrepreneurs’ potential and innovative spirit, considering factors beyond traditional collateral and credit history. By assessing the business idea, potential market demand, and the entrepreneur’s dedication, NBFCs and fintech platforms extend funding opportunities to young entrepreneurs who traditional lenders would otherwise overlook.
Through these alternative financing options, young entrepreneurs gain the support and resources necessary to transform their innovative ideas into thriving businesses. This empowers young entrepreneurs in India and contributes to job creation, economic growth, and overall development in the country.
NBFCs have emerged as game-changers in the financing landscape, particularly for younger entrepreneurs in India. Unlike traditional banks, NBFCs have a more flexible and inclusive approach towards lending, recognising young entrepreneurs’ unique challenges. These financial institutions specialise in offering tailored solutions to MSMEs, providing them with vital financial support to fuel their ventures.
Kinara Capital is one such NBFC firm in India that believes in inclusivity and provides unsecured business loans to MSMEs. Here is a video of Ashish Ananda Khot, one of the Kinara customers who grew greatly with myKinara loans. He started his company, RK Industries, soon after completing his graduation. As a young entrepreneur, he aspired to scale up his business but worried about the banks being unwilling to lend to him. This is when he met a Kinara representative and applied for a collateral-free business loan. He had only 1 machine when he started and with a Kinara loan, he was able to increase it to 5 in just 2 years.
The Government of India and NBFCs offer various schemes and business loans to support young entrepreneurs in obtaining funds to expand their businesses. These initiatives aim to promote entrepreneurship, foster economic growth, and create employment opportunities. Some of the prominent schemes and loan programs available are Pradhan Mantri Mudra Yojana (PMMY), Stand-Up India Scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and Startup India.
It’s important for young entrepreneurs to research and understand the eligibility criteria, application process, and terms and conditions associated with these schemes and loans. Additionally, they can approach NBFCs specialising in business loans to explore financing options tailored to their specific needs.
One of the key advantages NBFCs offer is the provision of collateral-free loans. Traditional lenders typically demand tangible assets as collateral to mitigate their risks. However, NBFCs provide funds to young entrepreneurs without the burden of providing substantial collateral. Furthermore, NBFCs like Kinara Capital often require minimal documentation compared to traditional banks, which streamlines the loan application process. This simplified approach enables young entrepreneurs to focus on developing their ventures rather than being overwhelmed by extensive paperwork. Another young customer of Kinara who has acquired a business loan is Pradip Tukaram Aragade.
Pradip comes from a rural village. He started his room tool business components business named Tai Mauli Engineering at a young age. As he grew the business, he found his capacity falling short and needed to add more machines. He approached banks and applied for a loan right away. He used the amount to buy another machine. Later, he took more financial help from Kinara, which has helped improve his business in every way. He has added more machines and expanded his workforce from 1 to 10. The loan amount also helped him go from a 500 sq. ft. workspace to two factory locations. His current turnover is Rs. 50-55 lakhs from 4-4.5 lakhs!
Another significant advantage of NBFCs is their ability to provide quick loan approvals. The streamlined evaluation processes and efficient decision-making mechanisms of NBFCs ensure that young entrepreneurs in India receive prompt responses to their loan applications. This expedited process is crucial for entrepreneurs who need timely access to funds to capitalise on market opportunities and propel their ventures forward.
NBFCs like Kinara Capital have transformed the financing landscape for young entrepreneurs in India by offering collateral-free business loans. Their inclusive approach has provided a lifeline for young entrepreneurs in India, enabling them access to the much-needed financial support to turn their innovative ideas into reality.
Shark Tank, a television show where entrepreneurs pitch their ideas to a panel of investors, has gained immense popularity. The show has brought the whole pitching to investors and raising funds process to the forefront. Young people can see how entrepreneurs ideate, present and do business planning. Aside from inspiration, this gives them a clear idea about formally pursuing their big idea and turning it into a successful business venture.
Shark Tank’s success stories have created a ripple effect, establishing similar platforms and competitions that support and promote young entrepreneurs in India. In this way, Shark Tank has become a catalyst for innovation and entrepreneurship, encouraging a new generation of business leaders to think boldly and pursue their entrepreneurial aspirations. Some Indian entrepreneurs who have achieved notable success after appearing on Shark Tank are Auli Lifestyle, Get-A-Whey, Hammer Lifestyle and Nomad Foods
MSME Day is a global observance designated by the United Nations to recognise the crucial role of MSMEs in fostering economic growth, job creation, and poverty alleviation. It is celebrated on June 27th each year. India has a vibrant and dynamic entrepreneurial ecosystem, with a large number of young individuals venturing into the world of business. Here’s how MSME Day can contribute to spreading awareness among young entrepreneurs in India:
MSME Day can inspire and encourage young individuals to consider entrepreneurship as a viable career option. Highlighting success stories and showcasing the impact of MSMEs can motivate aspiring entrepreneurs to take a step forward.
The Indian government has implemented various schemes, policies, and financial assistance programs to support MSMEs. Spreading awareness about these initiatives on MSME Day can help young entrepreneurs understand the available resources and how to access them.
MSME Day events and activities can enable young entrepreneurs to connect, network, and collaborate. Facilitating interactions with established MSME owners, industry experts, and government officials can provide valuable insights and mentorship opportunities.
MSME Day can emphasise the importance of innovation and technology in the growth of MSMEs. It can showcase examples of how young entrepreneurs leverage innovative solutions and digital technologies to transform their businesses and stay competitive.
MSMEs face various challenges, such as limited access to finance, regulatory complexities, and market competition. MSME Day can serve as a forum for thought leaders to discuss these challenges, provide guidance, and offer practical solutions to young entrepreneurs who are just starting their entrepreneurial journey.
To maximise the impact of MSME Day in spreading awareness to young entrepreneurs in India, it is essential to leverage digital platforms, social media campaigns, webinars, workshops, and partnerships with educational institutions and industry associations. By actively engaging with the youth and providing them with the necessary knowledge and resources, MSME Day can contribute to the growth and success of young entrepreneurs in India.
The growth of MSMEs is instrumental in driving economic development, as these enterprises contribute significantly to employment generation, GDP growth, and overall socio-economic progress. With their fresh perspectives and innovative ideas, young entrepreneurs in India play a pivotal role in fueling this growth and shaping the future of the business landscape. Fortunately, young entrepreneurs have several options to acquire funding to grow and take their businesses to the next level. NBFCs like Kinara Capital have disrupted the traditional lending landscape by offering financial support to MSMEs. Unlike traditional banks, Kinara considers a business’s potential and viability, evaluating its growth prospects rather than solely relying on credit history, collateral, age or gender of the entrepreneur.
Kinara Capital is a rapidly growing MSME firm in India that provides unsecured business loans to young entrepreneurs in India. With their Asset Purchase Loans and Working Capital Loans, these entrepreneurs can access the funding they need to grow their businesses and achieve their dreams. In addition, Kinara recognises the unique challenges faced by women entrepreneurs in the MSME sector and offers an upfront discount to women-owned MSMEs with its HerVikas Program.
Applying for a business loan with Kinara Capital is hassle-free and convenient. MSMEs can begin the process by performing a quick 1-minute eligibility check on the myKinara App. Once approved, the loan amount is swiftly disbursed directly into the applicant’s bank account within 24-hours, enabling them to take immediate action. Moreover, Kinara’s dedicated in-house customer support team is readily available for any queries or assistance at 080-68264454. It ensures entrepreneurs can access the necessary guidance and support throughout the business loan process. With a customer-centric approach, streamlined processes, and commitment to supporting the growth of MSMEs, Kinara Capital is empowering young entrepreneurs in India to realise their business ambitions and contribute to the country’s economic development.
