UGRO Capital secures $40M impact debt financing

UGRO Capital, which focuses on MSME lending, signed a commitment letter with the United States International Development Finance Corporation (DFC) for a $ 40 million loan. 

The United States Agency for International Development (USAID) is supporting this transaction by committing its staff resources and linking its technical programmes to support inclusive and sustainable economic growth, the company said in a statement.

The investment will play a crucial role in the company’s journey to empower small businesses at the grassroots level and deepen financial inclusion across the country, the company said.

The capital will enable UGRO Capital to bolster its lending efforts to small and medium-sized businesses across India, with a focus on empowering women-owned enterprises. 

“Our shared vision of financial empowerment and inclusive growth drives us forward, and with DFC’s support, we will be able to further our mission of addressing every need of every MSME, especially women-owned businesses and new-to-credit borrowers,” said Shachindra Nath, Founder and Managing Director of UGRO Capital.

The company plans to direct approximately 70% of the funding to qualifying businesses (women-owned or led), and at least $ 5 million of the proceeds will support new-to-credit borrowers, with the backing of the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) Guarantee, it added.

“Access to finance for new-to-credit borrowers and MSME finance is a key driver for financial inclusion, and we are thrilled to be working with UGRO Capital to address the credit needs of small businesses aligned with our goal of supporting economic growth and financial access in underserved communities. This partnership will play a crucial role in advancing the growth of MSMEs and promoting gender equality through 2X qualifying businesses,”

This is also the third impact deal for UGRO within a year. It had previously raised around $29.7 million each through Non-Convertible Debentures (NCDs) from Asian Development Bank (ADB) in January 2024 and FMO, the Dutch entrepreneurial development bank in December 2023.