Individual Business Credit Grew at 26% in Telangana And 25% in Andhra Pradesh, Outpacing Enterprise Lending in Micro-Business Credit Market

·       Business-purpose credit to individual entrepreneurs grew at 26% CAGR in Telangana and 25% in Andhra Pradesh over three years, compared with 13% and 11% respectively among micro businesses

·       Telangana and Andhra Pradesh have 19.6 lakh and 23.8 lakh entrepreneurs respectively who have never borrowed as enterprises, highlighting a sizeable opportunity to formalize business lending

·       Nationally, micro business entrepreneurs account for ₹29.6 lakh crore in outstanding commercial credit, with individual borrowing growing at 21% CAGR

Hyderabad, India, 29^th October 2026: Micro business entrepreneur (MBE) credit markets in Telangana and Andhra Pradesh have reached approximately ₹1.74 lakh crore and ₹1.45 lakh crore in outstanding balances respectively as of June 2026, with business-purpose borrowing by individuals growing significantly faster than lending to micro businesses. Over the last three years, outstanding balances held by individual entrepreneurs expanded at a 26% compounded annual growth rate (CAGR) in Telangana and 25% in Andhra Pradesh, compared with 13% and 11% respectively among micro businesses, reflecting the growing role of individual borrowing in financing entrepreneurial activity across both states.

This expansion is also bringing attention to a sizeable opportunity in enterprise-level credit. Approximately 19.6 lakh individual entrepreneurs in Telangana and 23.8 lakh in Andhra Pradesh had never borrowed as enterprises as of March 2026. In Telangana, 62% of these entrepreneurs demonstrated strong creditworthiness, while 61% in Andhra Pradesh had CIBIL Scores of above 730. These findings, from Micro Business Entrepreneurs in India: Growth, Transformation & Emerging Opportunities, a joint study by TransUnion CIBIL and the National Small Industries Corporation Limited (NSIC), highlight the potential to widen access to structured business financing among entrepreneurs who already have established individual credit profiles.

Across India, MBEs accounted for ₹29.6 lakh crore in outstanding commercial credit as of June 2026, representing nearly half of the overall commercial credit portfolio. Of this, ₹19.1 lakh crore was held by individuals borrowing for business purposes and ₹10.5 lakh crore by micro businesses. Individual borrower balances grew at a 21% CAGR over three years, compared with 12% among micro businesses, indicating that business-purpose borrowing in individual capacity is expanding enterprise-level credit faster than.

Chart 1 – Commercial Outstanding Balances

Property-Backed Lending Anchors Entrepreneurial Credit Growth Across Telangana and Andhra Pradesh

The micro business credit landscape across Telangana and Andhra Pradesh reflects strong demand for secured financing alongside expanding entrepreneurial activity. Loans against property (LAP) account for 53% of outstanding MBE balances in Telangana, the highest among the states analysed, compared with 41% in Andhra Pradesh. Among micro businesses, trade remains a key sector, accounting for 33% of outstanding balances in Telangana and 43% in Andhra Pradesh, while manufacturing contributes 17% and 18% respectively. Non-bank finance companies (NBFCs) continue to support individual entrepreneur financing across both states, accounting for nearly 48% of individual borrower balances in Andhra Pradesh and 38% in Telangana, largely through commercial vehicle and property-backed lending.

Ejaz Nazeer, Chief Product Officer TransUnion CIBIL, said: “Telangana and Andhra Pradesh have distinct entrepreneurial ecosystems, with financing needs shaped by different sectors, business models and stages of growth. Property-backed lending continues to play an important role, while traders, transport operators and small manufacturers increasingly require credit solutions aligned with their operating needs. As entrepreneurs develop established borrowing histories, lenders have an opportunity to assess their business cash flows and provide financing that evolves alongside their enterprises. Strengthening this progression from individual borrowing to enterprise-level credit can help entrepreneurs access a wider range of financial solutions and support sustainable business expansion across both states.”

Shri Suresh Babu, Zonal General Manager (South Zone), National Small Industries Corporation Limited (NSIC), said: "Telangana and Andhra Pradesh have strong entrepreneurial ecosystems led by traders and manufacturers. The report points to a sizeable 'missing middle' in both states. About 19.6 lakh entrepreneurs in Telangana and 23.8 lakh in Andhra Pradesh borrow for business purposes in their individual capacity but have never borrowed as enterprises, and most of them have healthy credit profiles. Helping this missing middle move to enterprise-level credit can open up working capital and growth finance for them, and reduce their dependence on personal assets as collateral. At NSIC, we support small enterprises with access to markets, credit, raw materials, technology and public procurement. We will continue working with lenders and partners such as TransUnion CIBIL to help more entrepreneurs in both states formalise and grow."

Bridging the Gap Between Individual Borrowing and Enterprise-Level Credit

A significant number of India's MBEs have established borrowing histories in their individual capacity but have yet to access credit as formal business entities. As of March 2026, approximately 3.9 crore individual business borrowers across India had never borrowed in an enterprise capacity. Among them, 54% had two or more years of business-credit experience, while 63% had a CIBIL Score of above 730, indicating a substantial pool of borrowers with established credit profiles.

For lenders, this represents an opportunity, subject to their applicable credit policies, underwriting criteria and regulatory requirements, to support entrepreneurs as they progress from individual business borrowing towards enterprise-level credit. Greater access to working-capital facilities, cash credit and overdraft products could help businesses meet evolving financing requirements, while reducing their dependence on personal assets as collateral.

Chart 2 – Opportunity for Formalising Enterprise Credit Access

The opportunity for deeper enterprise credit access across Telangana and Andhra Pradesh is supported by established borrowing histories and healthy credit profiles. Among entrepreneurs who had never borrowed as enterprises, 56% in Telangana and 57% in Andhra Pradesh already possessed business borrowing experience of at least two years.

As of June 2026, 53% of outstanding individual business borrower balances in Telangana and 44% in Andhra Pradesh belonged to the above prime segment¹. Portfolio performance also remains relatively healthy, with 90+ days delinquency at 1.7% in Telangana and 2.1% in Andhra Pradesh. In Andhra Pradesh, delinquency improved by approximately 53 basis points (bps) over the last three years. These trends highlight the opportunity to expand structured enterprise financing among eligible entrepreneurs across both states.

Secured Lending Remains Central to Micro Business Credit

Across India, lending to MBEs remains predominantly supported by secured and collateral-backed products. LAP accounted for ₹10.9 lakh crore in outstanding balances as of June 2026, making it the largest product category, followed by cash credit and overdraft facilities at ₹5.6 lakh crore and commercial vehicle loans at ₹5.0 lakh crore. These financing patterns reflect the continued importance of collateral in supporting business borrowing, while also highlighting opportunities to expand cash-flow-based and working-capital-oriented lending.

The expansion in micro business credit has been accompanied by improving portfolio quality. Overall delinquency levels declined from approximately 3.0% in June 2023 to 1.9% in June 2026, reflecting stronger repayment performance amid sustained credit growth. As financing becomes more accessible, understanding the credit needs and repayment capacity of different entrepreneur segments will remain important for maintaining portfolio resilience.

Enabling the Next Phase of Micro Business Growth

As India's entrepreneurial ecosystem expands, the next phase of micro business credit growth will increasingly depend on enabling businesses to progress towards more structured enterprise financing. Wider adoption of cash-flow-based underwriting, credit guarantee mechanisms and digital financial information can help lenders assess viable businesses beyond traditional collateral-based approaches.

Strengthening the connection between individual business borrowing and enterprise-level credit can support greater formalisation, improve access to financing suited to different stages of business growth and create new opportunities for entrepreneurs across India.

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1. Enhanced CreditVision (CV) score ranges are: Below Prime = 300-730; Prime = 731-800; Above Prime = 801-900.