| Business Can Be Started Small |
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| There are numerous entrepreneurs who aspire to make it independently. As recession has cut down the number of jobs available, the lean market also has scared many to go big. However, many prime banks do not offer
small business loans. There are other financing agencies which offer such loans but with a lot of documentations and legal papers are solicited, which however, are time consuming to acquire.
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How To Get A
Small Business Loan? There are micro financing organizations which have come up with an alternative to such dilemma. These outfits often require people to form a joint liability group wherein they would like to use peer pressure to recover the loan. This implies that four to six persons can form a group called joint liability group and they agree to pay in case one member is unable to pay on the due date. They can recover the money from the member on a later date by the members.
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| This takes care of the social aspect of the service at the same time ensuring the recovery. Micro Financing Institutions, which are dubbed as MFIs, function with some capital borrowed from the main stream banks or from the Corpus fund. This however, ends in a higher rate of interest which comes because of an opportunity cost. However, most of them charge it in decreasing principal basis and hence the overall
interest rate does not appear to be so high.
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| The residential proof and no pending financial liabilities, and credit worthiness of the person are the criteria for being eligible for such a loan. The activities of a person which are seasonal, are taken into account which accounts for livelihood year round, rather than a major activity which is likely to give some surplus to an individual. Therefore, most people who are treated as un-bankable by premium banks, are proven credit worthy with more than 90 per cent of recovery rate.
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| The loan period is normally 12-18 months , in some cases it may extend up to 60 months according to the repayment capability of the customer. However, the repayment period for every member in the group is usually kept the same. The other criteria is that the no individual member can apply for another loan unless all members pay back the loan.
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| Click here to compare small business loan lenders. |
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