Microloans are in the nature of short-term finances that are available to self-employed persons, small businesses, start-ups, etc. These loans have a low credit requirement. This type of finance is especially helpful to those eligible applicants that have little to virtually no access to financial assistance. Given below are a few basic details of the microloans.
Additional Reading: What Are Microloans How Do They Work
The purpose of these microloans is to use it for various purposes like,
- Meeting working capital requirements
- Managing the cash flows
- Meeting salary commitments for the staff
- Meeting debt commitments
- Using finance to start a new business
The primary objectives of microfinance institutions are to support small businesses, start-ups and women entrepreneurs along with aiding the socio-economic development and economic development of the nation.
These microloans are usually provided by small finance institutions or Microfinance Institutions that have been set up in the country to provide financial assistance primarily to the low-income groups. Some of the common providers of microloans are mentioned below.
- Annapurna Microfinance Private Limited
- Equitas Small Finance
- Fusion Microfinance Private Limited
- Bandhan Bank
- Ujjivan Small Finance Bank
- How to apply
Micro Loans can be applied through an online application or by visiting the nearest branch offices of the MFIs (Microfinance Institutions). The application process of microloans is given below.
- Online process
The online process of application involves visiting the website of the bank and applying for microloans directly through the website. The applicant is required to meet the eligibility parameters and submit the necessary documents for the same.
- Offline process
Under the offline process of the loan application, the applicant has to visit the nearest office of the MFI and apply for the loan by submitting the documents as per the lender. The loan will be sanctioned based on the eligibility of the applicant and the documents submitted.
Microloans are an easy option to avail small finance, especially for low-income groups. These loans can be availed for short terms by applicants having low credit scores and unavailability of other financings.