India's Small Business Credit Soars by 15% to Rs 47.8 Lakh Crore by December 2025
Synopsis
India's small business credit system shows remarkable resilience, with a 14.9% increase in total credit exposure to Rs 47.8 lakh crore as of December 2025. This growth is largely driven by sole proprietors and a notable rise in women borrowers, indicating a positive trend in the entrepreneurial landscape.
Key Takeaways
14.9% increase in small business credit year-on-year.
Sole proprietors dominate with 80% of the total portfolio.
Women borrowers represent 23.9% of the total.
NBFCs' share rose to 28% .
Average loan size remains consistent at Rs 3.34 lakh .
New Delhi, April 2 (NationPress) The small business credit landscape in India showed strong growth in the December 2025 quarter, with total credit exposure increasing by 14.9 percent year-over-year, reaching Rs 47.8 lakh crore, according to a report released on Thursday.
The collaborative study conducted by CRIF and SIDBI revealed that sole proprietors remained the backbone of the small business lending sector, representing nearly 80 percent of the total outstanding portfolio.
Active loans for sole proprietors constituted 62.5 percent of total loans, while they accounted for 73 percent of all borrowers.
The overall origination value saw a rise of 13.3 percent year-on-year from December 2024 to December 2025, with sole proprietor originations increasing by 15 percent. This growth was bolstered by a higher involvement of women borrowers, who made up 23.9 percent of the total, alongside younger borrowers under the age of 35.
The average loan size in the sole proprietorship category stayed consistent at Rs 3.34 lakh.
Additionally, non-banking financial companies (NBFCs) increased their share of the small business loan sector to 28 percent in December 2025, up from 26.8 percent the previous year, particularly dominating the sole proprietor lending space with 41.6 percent of the outstanding portfolio.
Portfolio quality remained stable, with 3.5 percent of the portfolio at risk for 31-90 days and 1.3 percent for 91-180 days, showing little change since September 2025.
Credit distribution expanded beyond major urban centers, with cities outside the top 100 now accounting for nearly 40 percent of sole proprietor credit. The top ten states represented almost 72 percent of the overall portfolio, with Uttar Pradesh, Telangana, and West Bengal leading in growth.
Credit in aspirational districts surged by 18.4 percent year-over-year to Rs 3.2 lakh crore, while asset quality improved, with the portfolio at risk for 91-180 days decreasing from 1.8 percent to 1.4 percent.
Furthermore, the formalization trend continued, with 23.3 percent of sole proprietor originations and 11 percent of enterprise originations in the past year coming from new-to-credit borrowers. The proportion of very low and low-risk borrowers rose from 64.8 percent to 69.1 percent for enterprises and from 50.3 percent to 55.8 percent for sole proprietors between December 2023 and December 2025.
Point of View
It is clear that sole proprietors are pivotal to this sector's success. The data indicates a promising trajectory bolstered by increased participation from women and younger entrepreneurs, reflecting broader economic inclusivity. This trend can be a catalyst for sustainable growth in the Indian economy.
NationPress
8 Jul 2026
Frequently Asked Questions
What is the current small business credit in India?
As of December 2025, India's small business credit stands at Rs 47.8 lakh crore, reflecting a year-on-year increase of 14.9%.
Who are the main borrowers in the small business credit sector?
Sole proprietors constitute the majority of borrowers, accounting for nearly 80% of the total portfolio outstanding.
What percentage of small business loans are from women borrowers?
Women borrowers made up 23.9% of the total small business loans in December 2025.
How has the role of NBFCs changed in small business lending?
Non-banking financial companies (NBFCs) increased their share of the small business loan portfolio to 28% in December 2025, up from 26.8% the previous year.
What is the average loan size for sole proprietors?
The average loan size in the sole proprietorship segment is stable at Rs 3.34 lakh.
