A loan is a useful financial instrument that enables us to get out of rough financial situations. However, a traditional personal loan has quite a few protocols, and may take several years to pay it. Microloans, on the other hand, are similar instruments, but have a shorter repayment period and do not have many strict protocols.
Microloans are short term loans that involve lending a small sum of money (this amount depends on the lender’s regulations), which is repaid with interest over a short period. This repayment period can range from 12 months to 24 months, depending on your ability to pay.
The main difference between these types of short-term loans, when compared to a traditional loan is that the loan period is short and does not include high amounts of cash.
Microloans work in different ways, depending on the lender’s regulations. Therefore, it is best to take an example such as the ‘Diriya’ microloan offered by HNB FINANCE. Firstly, the following documents have to be submitted to see if you qualify for the microloan.
Once these documents are submitted and processed, a maximum loan amount of LKR 1 million can be provided to you with conditions. These conditions would include a specific interest rate, repayment period, along with other fees (This depends on the amount that has been lent to you, and your ability to repay it).
Due to the small loan amounts, short repayment periods, and faster processing of the loans, businesses can use this facility to their advantage. There are 4 popular benefits that the facility can be used in the case of your new small business.
In short, a microloan is a financial instrument that is perfect for your new small business to avoid short-term financial problems. HNB FINANCE makes it even more accessible to you with value-added services like training programs and training programs delivered right at your home.