The US International Development Finance Corporation (DFC) and United States Agency for International Development (USAID) are mutually sponsoring a USD 41 million loan portfolio guarantee to help finance investments by Indian Small and Medium Enterprises (SMEs) in renewable energy solutions, including rooftop solar installations.

In a statement, the US embassy said these loans will enable SMEs to access reliable power and cut costs.

At the signing of the guarantee agreement, USAID/India's Acting Mission Director Karen Klimowski said, ''USAID/India is pleased to promote power diversification and support local businesses in India. Investments in solar solutions, secured by these credit guarantees, will improve access to clean, steady, and affordable energy as well as further progress towards India's clean energy transition and climate change mitigation.''

India's commercial and industrial sectors pay high fees for their electricity, making rooftop solar a sustainable, cost-saving investment, but SMEs and residential consumers face obstacles in securing the financing needed to install and use rooftop panels, the statement said. SMEs account for 48 percent of the total energy consumed in India's industrial sector.

USAID and DFC partnered with the New York-based Encourage Capital, an environmentally focused investment firm, and two Indian non-banking financial companies, cKers Financial and woman-owned Electronica Finance Limited (EFL), to address this challenge. Encourage Capital has invested USD 15 million in EFL, which will use the USAID-DFC loan portfolio guarantee to stimulate the rooftop solar market, representing a USD 9 billion market opportunity,  for SMEs.

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