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Online Microfinance | Definition, Benefits and How It Works

December 07, 2023 • 689 views

A Microfinance Personal Loan is a type of financing service that is provided by microfinance institutions (MFIs) to individuals who have limited access to traditional banking services. These loans are typically utilized for various personal needs, such as education expenses, medical bills, home repairs, and small business ventures. Keep reading to understand what microfinance is and the key advantages of microfinance Personal Loans.

Understanding Microfinance

Microfinance is a financial approach that aims to provide banking and lending services to low-income individuals and communities, especially those living in underserved or remote areas. This concept emerged as a response to the financial exclusion faced by millions of people worldwide and has since become an important tool in poverty alleviation and economic development.

Various Reasons to Apply For Microfinance

The primary purpose of microfinance Personal Loans is to empower individuals and communities by providing them with the financial resources needed to improve their lives. These loans serve several essential purposes, such as:

  • Community Growth: Microfinance supports small businesses, creating jobs and stimulating local economies.
  • Emergency Funds: These loans act as a financial safety net during crises.
  • Education and Skills: These loans finance education and skill development for better job opportunities.
  • Women's Empowerment: Microfinance empowers women from economically weaker sections to fund their specific goals without any difficulty.

Key Advantages of Microfinance

Microfinance Personal Loans are important for helping less privileged communities, improving their financial situation and promoting economic growth and stability. Some of the biggest advantages offered by microfinance Personal Loans include

  • Quick and Easy Application Process: Applying for a microfinance Personal Loan is straightforward, with a quick approval process that ensures borrowers can access funds when needed. This simplicity of microfinance makes it a practical and convenient option for borrowers with limited financial choices.
  • Access to Small Loan Amounts: These loans are designed for minor financial needs, making them ideal for small-ticket expenses without the burden of a large debt.
  • Simpler Eligibility Criteria: Microfinance Personal Loans come with simpler eligibility criteria. This makes it easier for a broader range of people to access loans, irrespective of their background.
  • Fast Approval and Disbursement: Microfinance Personal Loans are known for their speedy approval and quick fund disbursement, ensuring borrowers can address their financial needs promptly. This serves a crucial purpose during emergencies or time-sensitive situations when access to quick funds becomes a priority.

How to Apply for an Online Microfinance?

Applying for a Microfinance Personal Loan is a straightforward process. Interested individuals can visit the official website or branch of your chosen lender, and follow the steps mentioned below:

  • Gather Required Documents: Start by collecting the necessary documents, which usually include identification proof, income documents, and address proof. The exact requirements can vary from one institution to another, so it's essential to check with the specific lender.
  • Fill Out the Application Form: Once you have the required documents, fill out the loan application form. Be sure to provide all the requested information, as incomplete or inaccurate forms can lead to delays in processing.
  • Submit Your Application: After completing the application form, submit it to the microfinance institution of your choice. Many institutions offer online application options, making it even more convenient for you to apply.

Also Read - Microfinance Definition: Benefits, Importance, and How it Works

Useful Tips for Getting Approved for Microfinance

To enhance your chances of approval for a Microfinance Personal Loan, consider these key factors:

Maintain a Good Credit History

While microfinance loans often have simpler eligibility criteria, a positive credit history can still work in your favour. It shows that you're responsible for your financial commitments and increases your credibility with the lender. A credit score of 700 and above is generally considered favourable among most lending institutions.

Show Stable Income

Demonstrating a steady source of income is crucial. This reassures the lender that you can repay the loan on time. Providing evidence of a regular paycheck, business income, or any other consistent income source can significantly improve your loan application's chances of being accepted.

Choose a Reputable Microfinance Institution

Research and select a microfinance institution that has been consistently delivering excellent customer experience. Some Non-Banking Financial Companies (NBFCs) like Poonawalla Fincorp are known for their dedication to helping people with their financial needs and enabling their specific goals.

Also Read - What is Micro Loan: Meaning, Objective, and How to Apply

Conclusion

Microfinance Personal Loans offer numerous benefits, such as easy access to funds and simple eligibility criteria. They serve as a lifeline for people facing financial challenges, empowering them to meet their various financial needs. Such loans are an excellent source of financial support for those who can't avail of funds from traditional financing institutions.

When seeking microfinance Personal Loans, it's wise to choose trusted institutions like Poonawalla Fincorp, which not only offers financial support but also ensures a positive experience for borrowers from different backgrounds. So, go ahead and apply for a microfinance Personal Loan today!

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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