Micro Loans: Key Benefits, Interest Rates, and Steps to Apply

Microloans are small, short-term loans aimed at supporting self-employed individuals, startups, and micro-enterprises by offering easy access to capital without the lengthy procedures of traditional bank loans. They play a vital role in providing financial assistance to low-income groups and micro-entrepreneurs who are often excluded from mainstream banking services. In India, initiatives led by the Reserve Bank of India (RBI) and the Government have significantly widened access to microloans, strengthening financial inclusion and encouraging entrepreneurship. This guide highlights the key features, benefits, eligibility, and application process of microloans, while explaining how they help individuals expand businesses, create livelihood opportunities, and contribute to economic growth.

Microloans are small-value, short-term loans designed to meet the financial needs of self-employed individuals, startups, micro-enterprises, and small businesses with limited capital requirements. These loans are especially beneficial for low-income groups and micro-entrepreneurs who typically lack access to formal banking or traditional lending channels. To explore your options for financial support, you can check your business loan eligibility before applying.

To bridge this gap, the Reserve Bank of India (RBI), with support from the Government of India, has encouraged initiatives aimed at extending credit to the unbanked and underbanked sections of society. This has been made possible through collaborations with private limited companies and other financial institutions to enhance financial inclusion across the country.

• Flexible repayments

  To repay your loan amount, you can choose from tenure of up to 96 months to repay your loan amount.

• High-value loan amount

  Get a high-value loan amount of up to Rs. 80 lakh upon meeting the eligibility to meet all your working capital requirements.

• Loan in account in 24 hours*

  Upon filing the application and getting loan approval, you can receive the loan amount in your bank account within 24 hours*.

• Choose a Flexi Loan to lower your EMIs

  You can lower your EMIs by up to 45%* on EMIs through the Bajaj Finance Flexi loan facility. Withdraw money from a pre-set amount and pay interest only on that amount.

• No security

  Get easy loans without collateral, meaning you will not have to pledge any asset while availing of a loan from us.

Benefits of micro finance

Some of the benefits of microfinance are:

• It helps start or expand businesses, increase income, and create jobs.
• It empowers women to become more independent, confident, and socially active.
• It improves well-being of the borrowers and their families.
• It fosters financial inclusion and literacy among the marginalised sections of society.
• It contributes to the economic development and poverty reduction of the communities and countries where it operates.

Purpose of micro loans

• Poverty Reduction: Microloans can be a powerful tool for poverty reduction by enabling individuals to become self-employed and increase their income.
• Entrepreneurship Promotion: They support the growth of small businesses and micro-enterprises, fostering entrepreneurship and economic development.
• Financial Inclusion: Microloans help integrate marginalised populations into the formal financial system by providing access to credit and other financial services.
• Community Development: By empowering individuals and communities, microloans can contribute to broader social and economic development. 

Microfinance loan interest rates generally fall within a fixed range, depending on the lender and the borrower’s financial profile. Entrepreneurs exploring funding options should compare these with the business loan interest rate offered by reputed lenders such as Bajaj Finance.

Before applying, borrowers can use a business loan EMI calculator to estimate monthly repayments and determine affordability with greater clarity.

To apply for microfinance loan, simply follow these steps:

1. Click on the ‘CHECK ELIGIBILITY' button on this page.
2. Enter your 10-digit mobile number and OTP.
3. Fill in the application form with your basic details, such as your full name, PAN, date of birth, and PIN code.
4. Once you enter all your details, please click on ‘PROCEED’ to visit the loan selection page.
5. Enter the loan amount that you need. Choose from our three business loan variants – Term, Flexi Term, and Flexi Hybrid.
6. Choose the repayment tenure – you can select tenure options of 12 months to 96 months and click on ‘PROCEED’.
7. Complete your KYC and submit your business loan application. Before submitting, don’t forget to check your pre-approved business loan offer to expedite the approval process.