MSME lender NeoGrowth raises $20 mn from Development Finance

Micro, Small, and Medium Enterprises (MSMEs) focused NBFC, NeoGrowth announced it has secured $20 million in funding from US-based development finance institution, International Development Finance Corporation (DFC), through the external commercial borrowing route (ECB).

NeoGrowth’s Whole-time Director and CEO, Arun Nayyar, said that this funding from DFC will be used to extend credit to customers to propel business growth.

DFC’s Vice President of the Office of Development Credit, James Polan, said, “DFC’s investment in NeoGrowth will increase access to capital for small businesses in India. NeoGrowth’s digital, flexible model enables it to reach more small businesses, promoting financial inclusion, economic growth, and development across the country.”
This funding commitment is for five years with a two-year moratorium on principal payment and will be utilised for onward lending to small and medium business customers as per ECB guidelines.

There is a lot of potential within the MSME segment. It contributes about 30 per cent to India’s GDP, and 45 per cent to India’s exports and is also the second largest employer of workforce after agriculture, as per data shared by the Micro, Small, and Medium Enterprises Ministry. Prime Minister Narendra Modi has often highlighted the critical role this sector will play to help India become a $5 trillion economy. 

NeoGrowth was started in 2013 by Piyush Khaitan, and Dhruv Khaitan with an aim to serve this component of the business ecosystem which is significantly underbanked and is on the path to digital transformation. Since its inception, the start-up has engaged with over one lakh customers, disbursed over $1 billion in loans across 25 locations in India.

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