VYAPAAR: WHY WE NEED TO TALK ABOUT NANO ENTREPRENEURS

 

To make ends meet, a lot of single moms worked as house cleaners. She put in a lot of overtime seven days a week for little pay. They've always wanted to have their own store, and now she has the means to open one. She was able to spend more time with her kids and earn more money as a self-employed person.

For many of them, the COVID-19 lockdown proved disastrous. The majority of these istriwallas lost every client since nobody was allowed to leave their houses. Thankfully, they have now discovered the means and fortitude to reconstruct her company with Udhyam.  

This belongs to a class of Indian businesspeople known as "nano entrepreneurs." With 79% of this tiny and vulnerable population falling into debt and poverty, COVID-19 has had a particularly severe impact on them. Many have been compelled to permanently close their doors since they are unable to employ better technology like gas iron box for their vyapaar or operate from home.

WHAT IS A NANO ENTREPRENEUR?

People who operate tiny retail or kirana businesses, work as micro wholesalers, or make a living as street sellers are known as nano entrepreneurs. Because they did not have the opportunity to attend college, they are unable to obtain official work. They make less than INR 25,000 ($330 USD) a month and live in leased dwellings. It is considerably more severe for people who have had a health or financial problem during the pandemic because many may have been in debt even prior to the outbreak. Compared to their peers in small and medium-sized businesses, nano entrepreneurs have distinct obstacles. However, small and medium-sized businesses usually lump nano entrepreneurs together.  It is unusual for nano entrepreneurs to distinguish between their personal and corporate revenue.

And unlike MSMEs, they:

• possess no loan collateral and very little insurance.

• lack the resources necessary to aid in their scaling.

• lack any formal training or specialised skills.

• possess less or no market access to aid in the expansion of their company.

Put simply, people are just a little push away from being forced into poverty. Focus on micro firms, which comprise the nano cohort, is unusual. This was made clear during the epidemic when small businesses found themselves in the midst and had no recourse to formal financing, government loans, or relief money.

Even while blue-collar gig workers and microfinance clients have access to credit facilities that nano entrepreneurs do not, nano entrepreneurs are frequently confused with these two groups of people. For example, in order to obtain loans, clients of microfinance rely on peer guarantors for vyapaar. Today's gig workers are technologically savvy, with formal records of their employment, transactions, and other information available on a mobile app, much like Uber drivers. They may now obtain official credit, insurance, and investment opportunities thanks to this formalisation, which also helps them become financially independent and well-off.  Nano companies are a special market with particular traits and difficulties of their own. It's time to put them back on track so they can reclaim their livelihoods and expand and sustain their enterprises. They require tailored solutions.

DIFFERENT CHALLENGES NEED DIFFERENTIATED SOLUTIONS

In order to provide more nano entrepreneurs the chance to create profitable enterprises, we have started collaborating with our partners. For instance, Gromor Finance, our partner, awarded istriwallas a returnable grant. They provide a returnable grant, which is a zero-interest financing programme with an ethical responsibility on the part of the buyer to repay the grant without facing interest charges. After the person has gotten back on their feet, repayment starts. Many are able to restart their iron business and keep providing for their families with a returnable award.    

In order to get nanos closer to financial inclusion, other partners have developed a number of models that enable loans without collateral. We have been able to establish guarantor arrangements with our partners in order to access substantial loan amounts. These guarantors offer a fast supply of financial liquidity and safeguard against any form of nonpayment risk. We will keep developing financing models that are specifically tailored to the needs of nanoentrepreneurs in the upcoming year.

BETTER OPPORTUNITIES FOR NANO ENTREPRENEURS

We owe it to individuals like Istriwallas and Udhyam to improve their access to financing so they may expand and grow their companies. We must make higher investments in this demographic segment by growing and creating specialised solutions.