Critical lessons from a survey of small businesses in India.

Small businesses are the backbone of India’s growing economy. There are 50 to 60 million micro, small, and medium enterprises (MSMEs) operating in the country, employing 110 million individuals and contributing nearly a third of the GDP. Despite a diverse lending landscape, access to formal credit remains a challenge for most; prior to COVID-19, it is estimated that 60 to 70 percent of all MSMEs’ credit requirements were unmet, a figure that is likely to increase given the current operational challenges institutions face. In addition, up to 40 percent of lending is informal, often with prohibitive interest rates.