Udhyam Learning Foundation Helps Small-Business Owners Reach Pre-COVID Income Levels via Interest-Free Loans

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January 19, 2021, Bengaluru: Udhyam Learning Foundation through its vertical UdhyamVyapaar, is focussed on enabling micro and small-scale entrepreneurs to scale and succeed. They have been helping nano-entrepreneurs or vyapaaris in the city build their business back to pre-COVID income levels and aim to do this by providing interest-free loans and necessary skill-sets and training to over 500 nano-entrepreneurs.

A lot of these vyapaaris were badly hit during the lockdown period and found it difficult to sustain their business due to loan sharks and lack of other monetary aid. UdhyamVyapaar, therefore, designed a unique model that not only offers monetary support but also enables the vyapaaris to undergo finance and digital lessons post the loan is availed. Creating business plans, managing profit and loss accounts, developing capabilities in marketing decisions and customer services are included in the training curriculum, which enables the vyapaaris to better utilise the funds. Besides, these vyapaaris are also provided with on-demand consulting and a WhatsApp group has been created for them to easily communicate, share their challenges and discuss new business ideas.

A vyapaari is eligible for INR 10,000 collateral-free loan and the repayment model is INR 100 in 100 days.

Commenting on this initiative, Mekin Maheshwari, Founder, Udhyam Learning Foundation, says, “A vypaari on an average earns around INR 500 daily and the informal money lenders charge exorbitant interest rates sometimes over 60 per cent p.a. for a loan of 10k. They are unable to get credit from the formal banking system, which requires assets, documents and evidence that they do not have. We envision being able to create models that can be used by NBFCs and banks to lend viably to this neglected segment of entrepreneurs. We hope to dispel myths around exorbitant non-payment by these hard-working entrepreneurs. Our digital training lessons and financial literacy aims to make them ready for the future and more resilient to cope with challenges. We believe in serving, enabling, and creating opportunities for the ‘invisible business owners’ who form a big part of our local market ecosystem.”

So far, UdhyamVyapaar has been able to raise funds through crowdfunding and corporate donations. Over 70 loans have been sanctioned to more than seven lines of business such as tea shops, ironing/laundry, homepreneurs, fruit/vegetable sellers, and over 61 per cent of small entrepreneurs were able to scale their existing businesses while 39 per cent kick-started new businesses. ULF, through this initiative, is also working on helping vyapaaris gain access to formal credit and enabling them to get rid of informal money lenders who charge exorbitant interest rates.