The CIC reported that the growth, led by higher borrowings by sole proprietorship concerns, was also accompanied by improvements in asset quality, with balances overdue for over 90 days now constituting 4 per cent as against 4.2 per cent the year before.
The report by CRIF High Mark, in association with Sidbi, said individual business borrowers account for 80 per cent of the portfolio and over 87 per cent of the active loans.
However, from a concentration perspective, the top 10 states account for almost three-fourths of the outstanding portfolio, it said, adding that Andhra Pradesh and Uttar Pradesh led the growth in FY26.
State-run banks were the only major lender category that showed an acceleration in enterprise term loan portfolio growth with 6.8 per cent expansion, while other lender groups slowed.
Amid a renewed thrust on manufacturing, the data showed 31 per cent of loans in the small business category were granted in the sector, while services and trading together accounted for over 47 per cent.
In manufacturing, the outstandings are concentrated in a few clusters like Bengaluru, Jaipur, Pune, and Rajkot, it said, adding that this has happened despite an improvement in asset quality in other clusters.
From a new-to-credit (NTC) perspective, which is a crucial number denoting such businesses joining formal finance, the data showed that lenders have a preference for sole proprietorship concerns over other entities.