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In this conversation with Alok Nag, founder of A&H Capital, he shares insights about the challenges faced by Indian SMEs and MSMEs and the role of fintech industry in addressing them. He talks about how financial inclusion can help businesses flourish and the role of government in empowering them.
1. What are the main challenges Indian SMEs and MSMEs face when trying to access credit?
For most Indian MSMEs, the problem isn’t a lack of ambition—it’s a lack of access to smart, timely credit. Over 92% still rely on informal or semi-formal lenders (SIDBI-CIBIL, 2023). That’s because traditional systems often miss what small businesses actually need.
At A&H Capital, we see five recurring roadblocks:
No Collateral: Most MSMEs don’t own property or heavy assets, so banks say no to secured loans.
Low Credit Awareness: Business owners often use personal loans or credit cards without understanding the long-term cost or credit impact.
Cash Flow Mismatch: Many MSMEs earn seasonally, but loans expect monthly payments. That gap causes defaults even when the business is healthy.
No Credit Guidance: Most just take the loan they get. They don’t get help on structuring it or building credit for the future.
Documentation Gaps: If GST or records aren’t in place, lenders can’t assess the business, so the loan either costs more or doesn’t happen at all.
MSMEs don’t just need credit, they need the right kind of credit, built around their business reality. That’s what we do at A&H: structure capital that works with their cash flow, not against it.
2. How can fintech solutions meet the needs of MSMEs, particularly in rural and semi-urban areas?
Fintech is finally making credit work for MSMEs in rural and semi-urban India. With digital payments, GST, and UDYAM registration becoming more common, even small businesses now leave behind enough data to be understood and supported.
Here’s how it’s helping on the ground:
Lenders use banking transactions, GST returns, and sales data instead of just credit scores
AI models give real-time loan decisions based on actual business activity
Paperless onboarding with eKYC and eNACH makes the process fast and simple
At A&H Capital, we’ve built digital lending systems that approve unsecured business loans in 24 to 48 hours. That speed makes a real difference for small shop owners, manufacturers, and service providers who can’t afford to wait weeks for working capital.
3. What role can government schemes play in financial inclusion for small businesses?
Schemes like CGTMSE, MUDRA, and Stand Up India have built the foundation for financial inclusion. CGTMSE alone backed over ₹1.13 lakh crore in loans last year. That matters. But for many small business owners, especially outside the big cities, these programs are still out of reach.
The intent is solid, but the execution needs work. Most small businesses either don’t know these schemes exist, or they get lost in long paperwork, unclear rules, and hesitant banks.
At A&H Capital, we believe the next step is integration. These schemes need to work with the systems MSMEs already use. That means:
Instant eligibility checks through PAN or GST
Simple dashboards where borrowers can track their loan status
Performance-based rewards like interest discounts for on-time payments
Private lenders like us are ready to help. With the right co-lending models and credit guarantees, we can speed up disbursement and expand reach without adding red tape.
The government has created strong schemes. Now it needs to connect them to the real world where small businesses actually operate.
4. How are you empowering businesses by providing financial solutions? How much of the loan have you disbursed so far? What is your disbursement target in FY 2026?
At A&H Capital, we do not see loans as products. We see them as tools to unlock growth, so that they can grow, we always wanted to create impact on SME’s and MSME’s growth journey. Since our inception, so far we have helped 3000+ clients to transform their business and we are fortunate enough to be part of 3000+ clients business growth journey. Our job is to match capital to business realities—not the other way around.
Since we started, we have disbursed over ₹3,000 crore to more than 3,000 clients approx. 12 states. We focus on unsecured business loans, emergency capital, sector-specific finance, and structured lending solutions that go beyond the one-size-fits-all model.
Our loans range from ₹50,000 to ₹50 crore and are disbursed within 48 to 72 hours. Each one is built around the cash flow cycle of the industry it serves. That flexibility is what sets us apart.
By FY 2026, we are targeting over ₹5,000 crore in total disbursements. We plan to double our unsecured loan portfolio with a sharper focus on professionals, MSMEs, and businesses aligned with environmental and social goals.
We are also preparing to launch green capital products designed to fund sustainability-linked growth. The future of lending is not just fast or digital—it is responsible.
5. You have presence in 12 states. What's your further expansion plan, and how much investment are you targeting?
While we already serve clients across 12 states, our next chapter is focused on Tier 2 and Tier 3 cities—places like Bhubaneswar, Indore, Nagpur, Coimbatore, Raipur, and Ranchi. These markets have high demand for capital but limited access to structured, reliable lending.
To close that gap, we are planning three things:
Partnering with rural NBFCs and cooperative lenders through co-lending models
Expanding into e-commerce and Agri-finance to support digital sellers and farmers
Building a stronger tech stack, including a digital-first loan origination system, better credit engines, and open APIs for fintech integrations
Over the next two years, we are targeting an investment of approx. ₹5 crore. This will go into technology, team expansion, and the infrastructure needed to support deeper partnerships on the ground.
We are not just growing our footprint. We are building a sharper, faster, and more inclusive lending model for the next wave of Indian businesses.
6. How should MSMEs prepare to deal with future crises? What three important lessons has the industry learnt from the pandemic?
The pandemic changed how we think about risk. Many MSMEs that were profitable on paper still went under because they lacked one thing: liquidity. The biggest lessons the sector has learned are simple but critical:
Cash flow matters more than profit - A business can survive losses, but not a cash crunch. Liquidity buffers are non-negotiable.
Do not rely on one lender - Many MSMEs had all their eggs in one basket. A mix of funding sources—like overdrafts, invoice financing, and emergency lines—helps businesses stay flexible when things tighten.
Go digital or fall behind - Firms with digital accounting, payments, and access to online credit recovered faster. Going digital is no longer a bonus. It is the baseline.
At A&H Capital, we now advise all our clients to build a liquidity cushion that covers at least three to six months of expenses. We help them stress test repayment plans and structure loans with flexibility built in so that if revenues dip, the business does not break. The next crisis may look different, but the way to prepare stays the same—stay liquid, stay flexible, stay digital.
7. What's your take on taxation for MSMEs?
Taxation should support business growth, When filing taxes feels like a full-time job, it pulls focus away from actually running the business.
Here’s what would make a real difference:
A single-window system that combines GST, income tax, and credit reporting
Tax breaks for going digital—like lower rates for businesses using UPI, digital invoices, or online payment systems
Clear deductions for interest paid on business loans, especially unsecured ones that keep MSMEs running day to day
At A&H Capital, we believe smarter tax policy can actually drive formalization. When credit health and tax compliance work together, MSMEs grow faster, stay stronger, and move into the formal economy on their own terms. The goal should be simple: reward the right behavior, reduce the red tape.
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