UGRO Capital, a small business lender in India, has ceased all new disbursements in its lower-yielding loan segment as of February 7. Founder and Managing Director Shachindra Nath explained that this strategic pivot aims to reshape the company's profitability over the next three years. The decision was driven by the realization that operating under a low-yield model, with loans averaging 15% interest, left little margin for profit after accounting for costs. The company plans to cut ₹220 crore in total costs, with a significant portion stemming from the Profectus acquisition. Moving forward, UGRO will focus on small-ticket loans against property (LAP) for micro, small, and medium enterprises (MSMEs) and merchant lending through partnerships with firms like BharatPe, PhonePe, and Paytm. This shift is projected to lead to a 20% annual portfolio growth and an increase in blended yields by 150 to 200 basis points. By FY29, UGRO aims for a return on assets of approximately 3%, which is three times its current levels. Nath expressed confidence in this new direction, having personally increased his shareholding in the company.