India’s micro, small, and medium enterprises (MSME) sector is a dynamic force driving the nation’s economic engine. As of May 2025, over 6.38 crore MSMEs have registered under the Udyam framework, 3.69 crore via the Udyam Registration Portal, and an additional 2.69 crore through the Udyam Assist Platform (UAP). This sector employs more than 110 million people and contributes nearly 30 per cent to India’s GDP. Yet, despite its sheer scale and significance, the sector remains constrained by a persistent, systemic challenge: access to timely and adequate financing.

The numbers paint a sobering picture. Nearly 99 per cent of all MSMEs are micro-enterprises, often family-run ventures operating on razor-thin margins. These businesses struggle to secure loans from traditional financial institutions, which demand collateral, credit histories, and extensive compliance requirements that micro-entrepreneurs often find difficult to meet. This mismatch between financial need and institutional comfort has led to an alarming credit gap estimated at Rs 25 lakh crore.

While large banks and NBFCs have typically avoided small-ticket, short-term loans due to high underwriting costs, a transformative new model has emerged to change the game. Enter small-to-small (S2S) financing, an innovative solution facilitated by M1xchange, an RBI-licensed Trade Receivables Discounting System (TReDS) platform. This approach is revolutionising working capital access by connecting MSMEs directly with financiers,........

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