Business loans to individual entrepreneurs have shown faster growth compared to those provided to commercial entities over the past three years. A report by TransUnion CIBIL and SIDBI revealed that outstanding commercial credit has surged to Rs 65.8 lakh crore, marking a 14% year-on-year increase. Loans to individuals constituted 28% of the total outstanding commercial balances, with the remaining 72% allocated to entities.
Individual borrower balances have increased by 1.8 times between March 2023 and March 2026, surpassing the growth rate of entity borrower balances, which grew by 1.5 times during the same period. The report highlighted a notable shift in India’s commercial credit market composition, with individual borrowers holding a significant portion of the overall commercial credit balances.
As of March 2026, around 2.8 crore individual borrowers had active business-oriented loans, with 43% classified as early-stage commercial entities with less than 24 months of credit history. Notably, nearly half (48%) of the total Non-Banking Financial Companies’ (NBFCs) Commercial Balances were attributed to individual borrowers, with private banks following as the second-largest lender category at 24% share among individual borrowers.
The report also emphasized the increasing prominence of the individual borrower segment across various commercial credit products. Loans against property constituted the largest share of outstanding balances for this borrower group, followed by commercial vehicle loans and unsecured business loans. Notably, individual borrowers accounted for significant portions of loans against property balances (68%), commercial vehicle balances (76%), and unsecured business loan balances (67%).
Bhavesh Jain, MD & CEO of TransUnion CIBIL, underscored the importance of understanding individual business borrowing within the broader MSME credit landscape. He noted that as MSMEs expand, their credit requirements evolve from small-ticket working capital to larger, sector-specific funding needs. Jain emphasized the need for the credit ecosystem to adapt to these changing dynamics, especially as borrowers transition from individual business borrowing to entity-level credit.
The report also indicated a decline in the share of new-to-credit (NTC) entities in origination volumes, dropping from 52% in FY23 to 42% in FY26. This decline suggests a moderation in the pace of first-time formal credit onboarding in recent years.
