PremiumThe funding deal is for a term of five years with a two-year moratorium on principal payment and the funds will be used for onward lending to SME customers
NeoGrowth, a non-banking finance company with a focus on micro, small and medium enterprises (MSMEs), on Tuesday said it has raised $20 million from the United States International Development Finance Corporation (DFC) through the external commercial borrowing (ECB) route.
DFC is US’s development finance institution and partners with the private sector to finance solutions to the challenges facing developing countries today. The finance institution invests across sectors including energy, healthcare, critical infrastructure, and technology in primarily low- and mid-income countries.
The funding deal is for a term of five years with a two-year moratorium on principal payment and the funds will be used for onward lending to SME customers as per ECB guidelines.
“NeoGrowth is funding India’s small businesses by leveraging the digital ecosystem and this backing from DFC will help us drive that mission further while also creating a positive impact on SMEs. We will be using these funds to further extend credit to our customers to propel their business growth," said Arun Nayyar, whole-time director and CEO, NeoGrowth.
NeoGrowth has been in SME lending for nearly a decade and claims to have engaged with over 1 lakh customers, disbursed over $1 billion in loans across 25 locations in India. Its digital payments-based lending, modular product suite, analytics-based underwriting and flexible repayment options are key to enabling credit access to SMEs, NeoGrowth said in its statement.
“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," said James Polan, Vice President of the Office of Development Credit, DFC.
DFC has a large investment portfolio in India, including in health, agriculture, renewable energy, climate solutions, and other critical sectors and it claims to adhere to high standards and respect the environment, human rights and worker rights in its investments.
“DFC also provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets," NeoGrowth said in its statement.