HDFC Bank, Mastercard, USAID, DFC Launches $100 Million Credit Facility to Assist SMB & Women Entrepreneurs

By: WE Staff | Thursday, 21 October 2021

On Thursday, HDFC Bank, Mastercard, the US government's Development Finance Corporation (DFC), and the US Agency for International Development (USAID), an independent agency that administers civilian foreign aid, launched a $100 million credit facility to assist Indian small businesses with their digitisation needs and recovery from the Covid impact. The assistance would be given only to new-to-credit small business owners, with at least 50% of women entrepreneur.

Veena Reddy, Mission Director of USAID India underlines, “Women have been disproportionately impacted by the Covid-19 pandemic, facing economic hardships that directly affect the livelihoods of their families and communities. Through this partnership, USAID will help facilitate access to finance and support the digitization journey for women-owned small businesses and entrepreneurs to help them recover from the pandemic and reach their full potential”.

According to the agreement, HDFC Bank would go beyond its current customer base to make at least 50% of the loan capacity available to 'new small business borrowers,' with a goal of using at least 50% of the facility to lend to women entrepreneurs through its branch network across India. Mastercard, on the other hand, will give skills training and education to small business owners on their digital alternatives through cooperation with the Confederation of Indian Industry (CII) and the Confederation of All Indian Traders (CAIT).

According to the report, the Mastercard Center for Inclusive Growth would also assist businesses in increasing income through philanthropic training programmes, as part of Mastercard's INR 250 crore contributions to help small businesses in India recover from the pandemic. By 'de-risking' HDFC Bank's lending to small business owners, DFC and USAID will make it easier to extend loan support. DFC's investment is part of the agency's 2X Women's Initiative, which invests in projects led or controlled by women, or that deliver a product or service that empowers women.

While government data on the number of MSMEs and women-led businesses affected or closed as a result of the pandemic isn't yet available, a huge number of such businesses have allegedly experienced temporary production unit closures, employment losses, and a significant reduction in working capital. According to SMERGERS, an online investment banking platform, 52,000 businesses were added to the site from April 1, 2020, to April 1, 2021, with 7,000 being confirmed or approved listings. In reality, before Covid, the daily average of enterprises for sale was ten, rising to twenty before the second wave, and was a record high.