In many emerging market countries, affordable private schools (APS) are thriving in low-income communities. Charging as little as $5 per month, APS are accessible to low-income populations and provide a considerably higher quality of education than government schools. While APS tend to expand with time, growth has been slow, fueled only by the reinvestment of school profits. Gray Ghost Ventures (GGV) has identified financing as one of the key barriers to the growth of the APS sector globally. We recognized that as social businesses that offer affordable, quality education using a sustainable, efficient business model, there is a need to provide APS with the tools and resources that would allow them to offer improved education in a sustainable manner.

To address this need for financial support, Gray Ghost Ventures created the Indian School Finance Company (ISFC) to provide capital to low-cost private schools across India. Established to help thousands of entrepreneurs and school proprietors in India bring educational opportunities to low-income communities, the low-cost private schools in the ISFC network are a natural extension of the years of experience GGV has gained working to find market-driven solutions to meet the development needs of emerging markets.

The ISFC is a Hyderabad-based non-banking finance company (NBFC), which extends medium-term loans at market rates to private schools that fall in the monthly average, student-fee range of 250-600 rupees (US$5-12). School borrowers must meet credit and collateral requirements and be able to demonstrate the project management skills needed to use and repay borrowed loan capital effectively. Average loan sizes are about 12 lakh rupees (US$24,000) and are used primarily for infrastructure investment, which results in an increase in enrollment, growth in school revenue and improved ability to repay loan obligations. The ISFC's goal is to identify the most capable school operators, help them improve the academic quality of their programs for more children, and to expand its financial support of these schools over time as their experience with making productive use of loans improves. Click here to learn more about the Indian School Finance company.