Money for your businessloanChecked Oct 2026
Microfinance loans (regulated by the RBI)
Small loans without collateral from microfinance companies, small finance banks and banks, usually repaid weekly or monthly in a group. Quick to get and expensive, so use them for stock that sells fast, not for machines.
Who qualifies
Households with income up to ₹3 lakh a year
- For
- Low-income households with no collateral
- Collateral
- None allowed
- Limit on repayments
- All loan instalments together may not exceed 50% of monthly household income
- Interest rate
- No fixed ceiling; the lender must publish its rates
What to know
- The Reserve Bank removed the interest cap in 2022. Rates are set by each lender and are well above bank rates.
- The lender must give you a fact sheet showing the rate and all charges, and may not link the loan to your deposit account.
- Harsh recovery methods are prohibited. You can complain to the lender and then to the RBI Ombudsman.
How to apply
- Compare at least two lenders' fact sheets: the yearly rate, processing fee and insurance charge.
- Borrow only what a month of sales can repay.
- Never take a second microfinance loan to repay the first.
Ask before you apply
We could not confirm these points. Terms change, so ask and get the answer in writing.
| Ask | Where to ask |
|---|---|
| What is the yearly interest rate including all charges? | The lender's key fact statement, before signing |
| How many loans is my household already repaying, in total? | Add them up yourself: this is where most trouble begins |
Other ways to raise money
- Mudra loanCollateral-free business loans in four slabs
- PMEGPLoan with subsidy for new units
- PM SVANidhiStreet vendors and hawkers in towns
- PM VishwakarmaPeople working with their hands in 18 traditional trades
- CMEGP (Maharashtra)Residents of Maharashtra starting a new unit
- Stand-Up IndiaSC, ST and women starting a new enterprise of some size
- CGTMSE guaranteeAny micro or small enterprise that has no property to pledge
- Self-help group creditWomen in rural self-help groups
- Gold loanAnyone with gold ornaments who needs money quickly
Sources
- RBI: Regulatory Framework for Microfinance Loans (master direction)
- Business Standard: RBI removes interest cap for microfinance loans
Scheme terms change by government order and differ between banks. Confirm everything with the bank or the scheme office before you commit money. Checked Oct 2026.