Does Access to Microcredit Improve Small Business Survival Rates? Evidence From Indian Street Vendors and Micro Enterprises

The research evaluates the potential impacts of microcredit on the survival likelihood of microenterprises and street vendors in India. The method used is that of qualitative secondary research, collecting evidence from peer-reviewed articles as well as government reports and policies for analysis. The result of the study indicates that microcredit can lead to improved survival of enterprises by alleviating liquidity issues, making more working capital available for lending purposes, providing not just financing, but working capital, and improving their financial resilience. However, the fact that microcredit becomes available does not guarantee that a borrower will continue operating their business, as the effective utilization of credit will determine whether a loan is productive or not. In some cases, small vendors will need just small financing for short-term needs, while others will seek more substantial funding needed for a wider range of business investments. The findings of the paper also indicate that developing flexible terms of repayments, and lending complemented with financial, and business support increase microcredit effectiveness.