If you are a passionate individual with a requirement of financial assistance, micro finance loan guide is all you need. Microfinance is a financial tool that helps unemployed and low-income individuals procure funds and make a wonderful life for themselves. Since India is a developing country, the microfinance market has recently seen continuous and rapid growth. As a result, people have begun to realize the true potential of this type of funding and its usage.
It provides financial services to people who have limited access to organised lending. Along with offering a micro finance loan, certain financial institutions offer other microfinance services such as micro savings and micro insurance unemployed individuals with low-income. Moreover, you can borrow for your small business through micro finance services and start that business you've always dreamed of. As a result, the microfinance industry has seen an astounding growth of 10% in the first three quarters of FY23. This industry disbursed a total loan over ₹ 1.85 lac crores in the during the same period. An added advantage of a micro finance loan is that it is collateral-free, which makes it easier for the customer to avail.
Micro Finance Loan Application
A micro finance loan's primary goal is to provide funds to the underprivileged easily. Therefore, micro finance loan companies have made the micro finance loan application process very simple. Follow
these steps for a micro finance loan application:
Loan Application: For micro loans the loan application is usually done at the customer’s residence with minimal documentation required, only basic KYC documents are taken from the customer to initiate the loan application process. Post this the loan edibility of the customers is derived based on the past repayment behaviour of the customer and their track record
Appraisal: Post the loan application, there is a field verification to ascertain the loan utilisation and the proximity of the customers’ residence in the group. Also, the repayment capacity of the customer is analysed by the credit officer or a branch manager in charge of processes.
Disbursement: Once the required checks are done, the loans are disbursed to the customers’ bank account on a real time basis and the customers can use the same for the trade activity for which the loan was availed.
What Are Micro Finance Loans And Other Types Of Micro Finance
A micro finance loan is a loan that low-income people can obtain without collateral. Here are other micro finance tools you should know about:
• Micro savings: Small business owners can open a savings account with no minimum balance. It will enable entrepreneurs to save small amounts of money from getting financial security over time.
• Micro insurance: This insurance cover is offered to micro finance loan borrowers. The unique feature of micro insurance is lower premiums as compared to regular insurance policies.
Micro Finance Loan Documents Required
Documents for microfinance loan application are identification proof such as an Aadhaar card or voter's ID. You can even provide a ration card or MGNREGA card. As for income proof, LTF considers your income-generating capacity while accepting your application for a micro finance loan. With a limited number of documents and a simple application process, you can obtain a micro finance loan from LTF in no time.
Micro finance has been able to help the under privileged rural population especially women with entrepreneurial aspirations to access funds easily and grow their business. A notable achievement of the microfinance industry has been that it has helped the rural women escape from the usurious rates charged by local money lenders by providing structured finance. After knowing about microfinance loan meaning, nothing should stop you from availing a micro finance loan today at LTF
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