Does Access to Microcredit Improve Small Business Survival Rates? Evidence From Indian Street Vendors and Micro Enterprises (Journal of Economics Finance and Management Studies)

Summary

• By July 12, 2026, 76.95 lakh street vendors were granted over 1.15 crore loans under PM SVANidhi, totalling ₹18,475 crore.p.7
• An impact assessment of more than 5000 beneficiaries found that in 95% of cases PM SVANidhi was the first bank loan taken.p.7
• For 2023-2025 the average annual income of PM SVANidhi borrowers increased by about 20%.p.8
• By July 2026, 29.71 lakh vendors had accessed the second loan tranche and 8.49 lakh the third.p.8
• The study uses qualitative secondary research and finds microcredit can improve survival by easing liquidity and working-capital constraints, but availability does not guarantee survival.p.1
• Secondary evidence indicates a positive but conditional association between microfinance and business viability.p.9

Key insights

1. Whether microcredit helps depends on how credit is used, since effective use determines whether a loan is productive.p.1
2. Credit spent on inventory, equipment and working capital improves productive capacity, while credit used for consumption and debt settlement gives limited benefits.p.8
3. Irregular revenue in informal businesses makes fixed microloan repayment schedules hard to meet.p.3
4. Increased access to formal finance should not automatically be read as improved survival.p.7
5. PM SVANidhi provides collateral-free working-capital loans to street vendors, with incentives for early repayment and going cashless.p.6
6. Policy should go beyond availability and focus on loan quality and effective use, including loan sizes matched to actual needs and flexible repayment.p.11
7. Credit alone was not solely responsible for the observed income gains.p.8