Micro Loans

Microloans are short-term loans with smaller loan amounts that can be availed by self-employed professionals, startups, micro-enterprises, small businesses, and individuals with low capital requirements. Microloans are types of small finance or business loan of the smaller amount offered to micro-entrepreneurs or low-income group families who have little or no access to financial or lending institutions.

With the help of the Government of India, RBI has initiated reaching out to the unbanked and underbanked people to provide them funding, in partnerships with Private limited companies and Micro Finance Companies (MFIs). NGOs are considered to be the most common micro-lenders after MFIs and private limited companies.

Eligible Entities

Microloans are majorly availed by self-employed professionals, sole proprietorships, small retailers, traders and manufacturers, startups, consultants, women entrepreneurs, unemployed people, workers with minimum wages, minorities, etc.

Purpose of Microloans

Microloans can be used for various business-related activities, such as meeting working capital requirements, maintaining cash flow, starting a new business, managing day-to-day expenses, paying salaries to staff, debt consolidation, etc. People facing trouble in availing business loans generally consider microloans or microfinance.

Popular Microloans providers in India 

Bandhan Bank

Microloans
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 year
Doorstep facility	Available, under Dedicated Doorstep Service Center (DSC)

BSS Microfinance

The company offers loans as a Business Correspondent of Kotak Mahindra Bank.

Micro Loans
Interest rate	25% p.a. onwards
Loan amount	Min. 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
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 Frequency	Weekly, Fortnightly, Monthly, as per choice
Repayment Tenure	12-36 months
Insurance	Rs. 7.5 lakh per Rs. 1000 per annum

SKS Microfinance

Income Generation Loans (IGL) – Aarambh
Interest rate	19.75% p.a. onwards
Loan amount	Min. Rs. 9,100 & Max. 20,010 for the 1st loan, next loan increase set is of 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, Engineer 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

Microfinance – Highlights
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
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: All the above-mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the MFI and RBI. GST and service tax shall be levied extra on the mentioned charges. The interest rates are updated as on January 2023.

Microloans or microfinance are also offered by National Bank for Agricultural and Rural Development (NABARD), initiated and sponsored by the Government of India.

People in need of money should first apply for business loans from private and public banks or NBFCs, as the interest rates offered by banks and NBFCs are comparatively lower than MFIs. However, if the applicant has already tried them then surely can opt for MFIs. Generally, applicants with very low credit scores or no financial history apply for microloans.