Having the option of accessing finance to keep their operations going can be a matter of survival for collective social enterprises, particularly in times of crisis. Finding and securing funds to meet their working capital needs is one of the biggest difficulties faced by our member cooperatives here at SEWA Cooperative Federation. This has only been aggravated as a result of the pandemic-induced lockdowns in the first half of 2020.
Many cooperatives have been supporting their members by extending limited financial resources to meet their basic household needs. This left their coffers bare when they began restarting operations.
Our enterprises’ requirements aren’t very large, generally in the ₹3-5 lakh range per year. Seeing as commercial and nationalised banks generally do not see the benefit in offering such small and distributed ticket sizes, SEWA Cooperative Federation facilitated the linkage of our enterprises to collateral-free working capital loans offered by private donors and NBFCs like Kinara Capital in the second half of the year to meet the deficits.
The first cohort of enterprises to receive these funds were Abodana (Handicrafts Cooperative) and Lok Swasthya Mandli (Healthcare Cooperative) to allow them to pivot to producing PPE (face masks and low-cost hand sanitizer) in April. Seeing as we were still at the early stage of a highly-uncertain pandemic after exiting lockdown, this finance was extended interest-free.
Since June, we were also able to leverage our network of donors to create a revolving fund for our agriculture cooperative of indigenous women in Gujarat’s Tapi District ‒ Megha Mandli. The cooperative, in turn, extended low-interest credit to its members to purchase Okra (bhindi) seeds to be sown in the coming growing season, only charging a small fee to sustainably meet the administrative and compliance needs of the fund.
It was easier for us to gauge the change in needs and make strategic use of financial resources in the agriculture and production space. However, since then, we have identified a pressing need from our service cooperatives in urban areas to meet growing monetary burdens due to a slower than anticipated return to normalcy resulting from fears around the need to maintain social distance and the rapidly spreading virus.
Thus, we have identified two more cooperatives ‒ Trupti Nashta Ekam and SEWA Homecare ‒ to link to private-sector funders to potentially receive working capital support in the next phase.