What is Micro Loans and when to get a Micro Loan?

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MICRO LOANS
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Description

• Microloans are a form of small-scale financing
  available to micro-entrepreneurs and low-income
  families who have little or no access to
  traditional financial or lending institutions.
• 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. 

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Microfinance Forms

• 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. 

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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. 

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What is the procedure for applying for a Micro
Business Loan?

• 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.

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Obtaining Documents for a Microfinance Loan

• 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

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THANK YOU 

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