Micro Loans 2022

RBI has begun reaching out to the unbanked and underbanked to provide them with funding through collaborations with private limited companies and Micro Finance Companies, with the support of the Government of India (MFIs). Following MFIs and private limited companies, NGOs are the most popular micro lenders. 

Microloans, micro-deposits, and micro-insurance are the three primary forms of microfinance. Let's take a closer look at them- 

• Micro Loans - Micro Loans are crucial in this situation. They are primarily given without collateral to people from rural areas who need small sums of money. 
• Micro savings - Microsavings accounts enable small business owners to maintain a savings account with no minimum balance requirement. The benefit is that it will instill in users a habit of saving for the future as well as some financial discipline. 
• Microinsurance- It is a form of protection offered to small businesses that take out a microloan. These insurance policies usually have lower premiums than conventional insurance policies. 
• Micro LAP – This is a loan against property (LAP) to individuals and MSMEs at highly competitive rates. These loans are backed by real estate and have a term of up to 15 years. These loans may be used to cover substantial personal expenses. This loan is available to small business owners who need a larger loan with a longer term than five years. The value of a Micro Loan can be appreciated because it gives individuals and small businesses a way to get money when other options aren't available. This instills a sense of financial security, allowing them to achieve their goals of asset development and risk mitigation. 

The following organizations offer microloans: 

• Self-employed individuals,  
• Sole proprietorships,  
• Small merchants,  
• Distributors, and producers,  
• Startups, consultants,  
• Women entrepreneurs,  
• Unemployed people,  
• Employees on minimum wages, minorities, and others often use microloans. 

Microloans can be used for a variety of business purposes, including meeting working capital needs, retaining cash flow, beginning a new business, handling day-to-day expenditures, paying employees' wages, debt restructuring, and so on. People who are having difficulty getting business loans should look into microloans or microfinance. 

• To assist families who are unbanked or underbanked in their socioeconomic growth. 
• To strengthen Self-Help Groups (SHGs) and use them for the country's economic growth. 
• To encourage and fund women's entrepreneurship and startups across the country. 

• Bandhan Bank 

• BSS Microfinance 

• Annapurna Microfinance 

• SKS Microfinance 

• Equitas Small Finance Bank 

• Ujjivan Small Finance Bank 

To apply for a microloan: 

• Step 1: Go to the MFI's official website. 
• Step 2: Fill out the loan application form. 
• Step 3: submit all relevant documents.  
• Step 4: Following the submission of the form, and MFI representative may contact the borrower and begin the loan process.  
• Step 5: When the MFI is satisfied with all of the submitted documents, the loan will be disbursed to the applicant's bank account. 

People in need of capital should apply for business loans from private and public banks, as well as NBFCs since the interest rates provided by banks and NBFCs are lower than those offered by MFIs. However, if the applicant has already tried them, MFIs are a good option. Microloans are typically sought by people with poor credit scores or no financial background.

Although the documentation needed to obtain a microfinance loan varies depending on the lender, the following documents are typically required: 

• The request form has been modified. 
• PAN card, passport photocopy, and ration card 
• Proof of office location 
• Images of the candidates and co-applicants in passport size 
• AOA/MOA/Partnership deed certified copies 
• Repayment track record 
• financial statements for the past two years that have been audited 
• For the previous two years, the ITR of partners/directors 
• Account statements for the previous six months 
• Proforma Invoice for the to-be-financed equipment 
• Professional certification certificates for judges, CPAs, architects, and physicians