What Is Micro Loans?

What Is Micro Loan

A micro loan or microcredit is a service offered by banks, and as the name suggests, the size of this loan is smaller as compared to regular basic loans. The main aim that a micro loan strives to achieve is to provide financial aid to low-income individuals and help them become self-dependent. Micro loans have recently become extremely popular in the country as every Indian found some or the other benefits they could derive from this service. According to the Economic Times, the year-on-year growth of the lenders' microfinance loan portfolio was about 10% at the end of December 2021.

The micro loan market has experienced stable growth even after covid. An important reason behind the popularity of micro loans is their ability to work towards solving the core issues faced by common Indians like poverty, not enough opportunities for women, not enough opportunities for vulnerable groups, and poor standard of living. Overall, the microfinance sector has experienced tremendous growth in the last two decades, and each day more and more low-income individuals are choosing micro loans in times of need.

Micro Loan in India

Through a micro loan scheme, you can borrow a loan and use it for the following purposes:

Starting a new business: If you are someone who has been planning to open up their own business for the longest time, this is your chance to do it. Micro loans are prevalent among low-income individuals who want to start their businesses.
Managing daily business expenses: A micro loan will be the best option if you are already running a business and having difficulty managing your day-to-day business expenses. Borrow a micro loan and say goodbye to the everyday stress of business expenses.
Paying off salaries to employees: Running a business is not easy. You have to manage many employees and are responsible for their livelihoods. Pay off the salaries of your employees on time by borrowing micro loans.

Micro Loan Eligibility

Micro loans provide for everybody, so the eligibility requirement is pretty basic. At LTF, we consider the borrower's income-generating capacity while accepting their application for a micro loan. To be eligible for a micro loan, your age should be between 20 to 60 years. LTF lends micro loans to women borrowers.

Documents Required For Micro Credit

The documents required for the application and processing of micro loans at LTF are an Aadhaar card, voter ID card, ration card, or MGNREGA card. However, as income proof, we consider the capacity of the borrower to earn rather than any other document.

In today's world, it is becoming exceedingly tricky, especially for low-income groups, to manage finances, earn a livelihood, run a business and raise a family all at the same time. Moreover, inflation is making things worse. With each passing day, the cost of living is increasing, and the opportunities to earn are decreasing. In such a situation, when a woman or a common Indian man with no financial aid wants to build a better future for themselves by starting their own business, they should turn to micro loans.

Today micro loans have helped thousands of people start their businesses and run their current businesses smoothly. By borrowing a micro loan, you will be helping yourself and your business, the people you have employed, and, needless to say, your friends, your family, and your mental and physical health. Now that you understand what is micro credit, you need to stop struggling and getting crushed under pressure. To meet your financial needs, borrow a micro loan from LTF today and watch your worries melt away.