It’s not easy growing a business – and it’s even harder when that business is a social enterprise. Unfortunately, in many emerging markets, the challenges of serving BoP customers are multiplied by difficulties in securing appropriate financing.Take India, for example. The country’s small and medium enterprises sector is severely underfinanced, with a debt gap estimated at INR 26 trillion (around a quarter of the country’s GDP). Banks and larger non-banking financial corporations have not been able to meet this demand effectively. The reasons for the lack of traditional bank funding are manifold, but they primarily stem from the lender’s desire to focus on a company’s track record instead of its future prospects. Traditional lending in India is also largely collateral based, relying on security value rather than business fundamentals as the basis for lending decisions.
