Micro Loans

Microloans, which have shorter terms and smaller loan amounts, are available to individuals with low financial requirements, startups, micro-enterprises, small firms, and self-employed professionals. Microloans are smaller-scale business or small-loan programs provided to low-income households or micro-entrepreneurs who have little or no access to banks or other lending institutions.

The RBI has started contacting the unbanked and underbanked in order to offer them with money through partnerships with Micro Finance Companies (MFIs) and Private Limited Companies, with assistance from the Government of India. NGOs are thought to be the most prevalent microlenders, following MFIs and private limited businesses.

Qualifiable Organizations

Self-employed individuals, sole proprietorships, small retailers, traders, manufacturers, startups, consultants, women entrepreneurs, jobless persons, minimum wage earners, minorities, etc. are the main recipients of microloans.

Why Do Microloans Exist?

Microloans can be used for a number of business-related purposes, including debt consolidation, beginning a new company, managing ongoing costs, fulfilling working capital requirements, keeping cash flow stable, and starting a new venture. Individuals who are having difficulty obtaining business loans typically think about microloans or microfinance.

well-known Indian providers of microloans

Bandhan Bank

Parameter	Details
Interest Rate	21.95% p.a.
Loan Amount	Min. Rs. 15,000 & Max. Rs. 1 lakh
Processing Fee	Nil for loan amount up to Rs. 25,000 and above that is 1.25% of the sanctioned loan amount + GST and taxes
Repayment Tenure	1 year / 2 years
Doorstep Facility	Available, under Dedicated Doorstep Service Center (DSC)

BSS Microlending

As a Business Correspondent of Kotak Mahindra Bank, the organization provides loans.

Parameter	Details
Interest Rate	25% p.a. onwards
Loan Amount	Min. Rs. 5,000 & Max. Rs. 80,000/- per loan under Joint Liability Group (JLG) concept
Processing Fee	1% of the sanctioned loan amount on micro loans of amount above Rs. 25,000
Collateral	Not required

Annapurna Microfinance Group Loans Details

Parameter	Details
Interest Rate	23.55% – 23.99% p.a.
Loan Amount	Min. Rs. 10,000 & Max. Rs. 1 lakh
Processing Fee	1.5% of the sanctioned loan amount + GST
Repayment Frequency	Weekly, Fortnightly, or Monthly, as per the choice of the borrower
Repayment Tenure	12-36 months
Insurance	Rs. 7.5 lakh per Rs. 1000 per annum

SKS Microfinance Income Generation Loans (IGL) – Aarambh Details

Parameter	Details
Interest Rate	19.75% p.a. onwards
Loan Amount	Min. Rs. 9,100 & Max. Rs. 20,010 for the 1st loan; next loan increase set is Rs. 29,565 determined by credit history
Processing Fee	1% of the sanctioned loan amount
Repayment Tenure	Up to 50 weeks with principal and interest payments due on a weekly basis

Equitas Small Finance Bank

Business Loan Highlights

• Loan against Financials: Rs. 5 lakhs to Rs. 75 Lakhs
• Loan for Self-employed Professionals: Architects, Chartered Accountants, Cost Accountants, Engineers from Rs. 5 Lakhs – Rs. 10 Lakhs
• Loan against POS Machine Sale: Based on POS machine sale from Rs. 5 Lakhs – Rs. 25 Lakhs
• Loan for Doctors: Rs. 5 Lakhs – Rs. 40 Lakhs

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Microfinance – Highlights

Parameter	Details
Interest Rate	23% p.a. 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 (LIG) categories

Ujjivan Small Finance Bank - Micro Loans

Parameter	Details
Interest Rate	22% p.a. onwards on reducing balance
Loan Amount	Min. Rs. 5,000 & Max. Rs. 1 lakh
Processing Fee	1.2% of the sanctioned loan amount (For loan amount above Rs. 25,000)
Repayment Tenure	6, 12, 18, 24, 30, 36 months

Note: The MFI and RBI have the last say over all interest rates, fees, and levies listed here. They are also subject to change. On top of the above fees, there will be additional costs for GST and service tax. The most recent interest rate modification was made in January 2023.

The National Bank for Agricultural and Rural Development (NABARD), established and funded by the Indian government, also provides microloans and microfinance.

Individuals in need of money should apply for business loans from NBFCs or private and public banks first, as their interest rates are typically lower than those of MFIs. The applicant may, however, choose MFIs if they have already tried them. Microloan candidates typically have very low credit scores or no financial history.