Udhyam Vyapaar helping COVID-hit vendors restart business

Bengaluru: The COVID-19 pandemic has wreaked havoc across all the business segments but the worst affected were street vendors. They lost their livelihood and, post pandemic, had virtually nothing to restart their lives afresh. Udhyam Vyapaar, a vertical of Udhyam Learning Foundation (ULF) is giving out interest-free loans to street vendors in Bangalore and imparting digital and finance-related lessons enabling them to reach pre-COVID income levels.

The Union government has launched PM SVANidhi scheme where working capital loans up to Rs 10,000 will be given to the street vendors. On the difference which ULF will make to the lives of the street vendors, Mekin Maheshwari, founder, ULF explained that Udhyam Vyapaar is offering a 'microcredit product', which is diligently designed keeping in mind various challenges faced by this community of nano-entrepreneurs.

"While all financial institutions stay away from fresh lending specifically to this segment fearing default, Udhyam Vyapaar envisioned a comprehensive product to support nano-entrepreneurs. It isn't only a fund deployment model, the team wanted to make sure that funds get utilized well and the ultimate goal of reviving the nano-businesses is accomplished. Therefore, building the capacity of the small business owners by training them in an array of skills and mindset, including imparting digital lessons, financial management and planning were equally critical to achieving the goal," he said.

On the selection of entrepreneurs, Maheshwari elaborated that nano- businesses are handpicked by Udhyam's business consultants based on certain business parameters like monthly income, tenure of business, past performance, use of digital technology, keenness to learn and adopt new things.

In order to avail the microcredit product, submission of a business plan and financial training are mandatory besides having a UPI ID.

He stated that the idea behind asking for a business plan and making financial training mandatory is to nudge small business owners to come up with alternative business solutions and ideas to re-imagine their existing business and at the same time, increase the likelihood of loan amounts being invested thoughtfully into business and being repaid.

"The cohort is split into smaller groups, each mentored by a business consultant. They follow up with small business owners regularly to track their progress and provide solutions to their business problems. The entire cohort is monitored and supported by the program execution team weekly or depending on their requirements," Maheshwari further elaborated. The lending limit Rs 10,000.

In May, Udhyam Vypaar had realized that the small scale vendors needed immediate relief from the impact of the sudden lockdown. For immediate relief, direct benefits in the form of Rs.5000 non-returnable grants were transferred to the accounts of around 400 'vyapaaris'. However, the operational challenges like connecting to the vendors and getting hold of their active accounts, online disbursements to those who do not possess smartphones were creating impediments. "Around 27% of 'vyapaaris' used some part of their grant for reviving their businesses. A reflection of this came when 50-year-old Kamalamma saved some money out of the grant to restart her groundnut selling business and earn Rs 250-300/ day. Rihanna, one of our 'vyapaaris' had no money to get medicines for her newborn baby girl while another tea 'vyapaari' Anjala was suffering from a kidney problem, the grant helped them get medical aid," Maheshwari said.

The insights gathered from the distribution of the non-returnable grants led Udhyam Vyapaar to come up with a more sustainable economic relief for the small business establishments.

The NGO is imparting digital and finance-related lessons enabling the vendors to scale and reach pre-Covid income levels.

More than 160 loans were sanctioned to nano-entrepreneurs. (Each loan is for Rs 10000). The NGO claims a 70% increase in daily income per vendor.