Microloans are also known as short-term loans that provide smaller loan amounts to the self-employed, startups, micro-enterprises, small businesses, and individuals with low capital requirements. This small finance is offered to micro-entrepreneurs or low-income group families. This is one of the best finance lending opportunities for the low-income group families who do not have access to financial or lending institutions.
Government of India in partnership with the private limited companies and Mico Finance Companies microlending has come into existence for the sake of lower bank or unbanked people.
Who can avail Micro Loans?
- Self-employed
- Sole Proprietorship
- Small Retailers
- Traders
- Manufacturers
- Startups
- Consultants
- Women Entrepreneurs
- Unemployed People
- Minimum wage workers
- Minorities, etc.
What is the Purpose of Microloans?
Microloans are especially for the various business-related activities, like -
- Meeting working capital requirements
- To maintain cash flow
- To start a new business
- To pay salaries to the staff
What are the Objectives of Microfinance?
- To support women entrepreneurship across the nation
- To support the socio-economic development for unbanked families
- To support the Self Help Groups
What are the Best Microloans Providers in India?
| Provider | Bandhan Bank |
|---|
| Interest rate | 17.95% onwards |
| Loan amount | Min. Rs. 1,000 & Max. Rs. 25,000 |
| Processing Fee | Nil |
| Repayment Tenure | Up to 12 months |
| Doorstep facility | Available, under Dedicated Doorstep Service Center (DSC) |
| Provider | BSS Microfinance |
|---|
| Interest rate | 25% onwards |
| Loan amount | Min. 12,000 & Max. Rs. 50,000 |
| Processing Fee | 1% of the loan amount on micro loans of amount above Rs. 25,000 |
| Collateral | Not required |
| Provider | Annapurna Microfinance |
|---|
| Interest rate | 21.90% onwards |
| Loan amount | Min. Rs. 10,000 & Max. Rs. 80,000 |
| Processing Fee | 1% of the loan amount + GST |
| Repayment frequency | Weekly, Fortnightly or Monthly, as per the choice of the borrower |
| Provider | SKS Microfinance |
|---|
| Interest rate | 23.55% onwards |
| Loan amount | Min. Rs. 7591 & Max. 11,610 for the 1st loan |
| Processing Fee | 1% of the loan amount |
| Provider | Equitas Small Finance Bank |
|---|
| Interest rate | 23% onwards |
| Loan amount | Min. Rs. 2,000 & Max. Rs. 35,000 |
| Processing Fee | Up to 1% of the loan amount |
| Offered to | Economically Weaker Section (EWS) & Low Income Group |
| Provider | Ujjivan Small Finance Bank |
|---|
| Interest Rate | 22% onwards |
| Loan amount | Min. Rs. 2000 & Max. Rs. 60,000 |
| Processing Fee | 1.2% of the loan amount (For loan amount above Rs. 25,000) |
| Repayment Tenure | 6 months, 1 year, 1.5 years and 2 years |
Note: Interest rates, fees and charges are subject to change and depend on the sole of the MFI and RBI. GST and service tax shall be levied extra on the mentioned charges.
How to apply for Micro Business Loan?
- Visit the desired MFI official website
- Fill the loan application form
- Provide all the required details and documents
- Submit the form
- After submission MFI's representative will contact the applicant
- MFI's representative once convinced, will proceed to disburse the loan amount to the applicants' bank account
List of Microfinance Companies in India:
- Annapurna Microfinance Pvt Ltd
- Arohan Financial Services Pvt Ltd
- Asirvad Microfinance Pvt Ltd
- Bandhan Financial Services Pvt Ltd
- BSS Microfinance Pvt Ltd
- Cashpor Micro Credit
- Disha Microfin Pvt Ltd
- Equitas Microfinance Pvt Ltd
- ESAF Microfinance and Investments Pvt Ltd
- Fusion Microfinance Pvt Ltd, etc.
What are the Documents Required for a Microfinance Loan:
- Loan Application Form
- Government ID Proof (PAN Card/Passport/Ration Card/Aadhaar)
- Office address proof
- Passport size photos of the applicant
- Track Record of repayments
- Other required documents'
- Note: Documents required varies from lenders to lenders
Bottom Line:
A microfinance loan is one of the best opportunities for people who have low or no credit score. People with low credit scores cannot get approval for the loan, but the MFI's gives the opportunity to avail of loan even with a low credit score as the Micro Loans.
