Micro Loan

Self-employed professionals, start-ups, micro-enterprises, small firms, and people with little financial requirements can all apply for microloans, which are short-term loans with lower loan amounts. Microloans are tiny business loans or other forms of small financing that are given to low-income families or microentrepreneurs who have little or no access to banks or other financial institutions.

In collaboration with private limited enterprises and microfinance organisations, RBI has started interacting with the unbanked and underbanked population to provide them with funds with the support of the Government of India (MFIs). Following MFIs and private limited corporations, NGOs are regarded as the most prevalent microlenders.

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Eligible Entities

Self-employed professionals, single proprietorships, small retailers, traders, and manufacturers, as well as startups, consultants, women business owners, unemployed individuals, minimum wage workers, and minorities, among others, frequently use microloans.

Purpose of Microloans

Microloans can be utilised for a variety of business-related purposes, including debt reduction, starting a new business, managing daily expenses, paying staff wages, fulfilling working capital needs, sustaining cash flow, etc. People who have difficulty getting business loans frequently think about microloans or microfinance.

Popular Microloans providers in India – January 2023

Microloans – 2023
Interest rate	21.95% p.a.
Loan amount	Min. Rs. 15,000 & Max. Rs. 1 lakh
Processing Fee	Nil for loans up to Rs. 25,000; for loans exceeding that level, 1.25% of the approved loan amount plus taxes and GST would be charged.
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 – 2023
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 – 2023
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 – 2023
Interest rate	19.75% p.a. onwards
Loan amount	The first loan must be between Rs. 9,100 and Rs. 20,010, with the following loan increase set at Rs. 29,565 and based on credit history.
Processing Fee	1% of the sanctioned loan amount
Repayment Tenure	Principal and interest payments are payable every week for up to 50 weeks.

Business Loan Highlights – 2023

Loan against Financials: 5 to 75 lakhs rupees
Loans for self-employed professionals ranging from Rs. 5 lakhs to Rs. 10 lakhs for architects, chartered accountants, cost accountants, and engineers.
Loan against the sale of a POS machine based on sales of POS machines between Rs. 5 and Rs. 25 lakhs
Loan for Doctors: 5 lakh to 40 lakh rupees

Microfinance – Highlights – 2023
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	Low Income Group (LIG) and Economically Weaker Section (EWS) categories

Ujjivan Small Finance Bank

Micro loans – 2023
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 of the interest rates, fees, and levies listed above are based solely on the MFI and RBI's discretion and are subject to change. In addition to the fees mentioned, GST and service tax will be charged. As of January 2023, the interest rates have been adjusted.

The National Bank for Agricultural and Rural Development (NABARD), established and supported by the Government of India, also provides microloans or microfinance.

People who need money should apply for business loans from private and public banks or NBFCs first because these institutions provide interest rates that are significantly lower than those of MFIs. The applicant may, however, choose MFIs if they have already tried them. Typically, candidates for microloans have very bad credit scores or no financial history.