Compare & Choose from the Best Business Loan Offers 
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.
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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 – January 2023
Bandhan Bank
| Microloans – 2023 | |
| 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 – 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 |
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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 | 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 |
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Equitas Small Finance Bank
Business Loan Highlights – 2023
- 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 – 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 | Economically Weaker Section (EWS) & Low Income Group (LIG) 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 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.
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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.