Group Loans are offered to a group with the age group between 21-62 years who has an income generating activity. ... Generally, to get a loan approved, the loan applicant should meet the eligibility criteria prescribed by the lender. A house wife too can get a loan is she is eligible for it. Though a home maker may not have a steady source of income, a following ways and means can be used to secure a loan.
The group loan is provided to any of the groups of targeted clients so as to use their capital in their micro scale business. Also, this loan is used by individuals so as to put in their loan amount into the other income generating activities which could result in improving their livelihood. The features of group loan are as follows:
- The loan amount could start up from 50,000 to 5 Lakhs.
- The interest rate upon the loan amount is very reasonable.
- The loan term is up to 24 months or two years.
- The repayment of the loan is flexible that means you can repay your loan according to the cash generated.
- It is important that you to take this loan in a group and minimum of it are two people.
The advantages of group loan are as follows:
- Flexibility: One of the biggest advantages of group loan is that it allows people to repay their loan amount as per their convenience. But it can only exceed up to 2 years. It isn't like and overdraft where all the credit is deducted in one time only. Also it isn't like consumer credit card where the maximum limit cannot be used in one time. It is flexible enough that you can repay your loan amount whenever you can.
- Cost effectiveness: When we talk about the interest rates, the bank loans are considered very cheap as compared to the overdraft and credit card facility. Therefore you don't have to worry about high interest rates and you can easily use the loan amount to increase your livelihood.
- Profit retention: Whenever you raise the funds through equity, there is a compulsion that you have to share the profit with your shareholders. But in case of the group loan, the loan amount raised and the profit achieved through it couldn't be shared with the bank.
- Benefit of tax: Government ensures the fact that an individual pays the interest on the loan but you can include a tax deductible item whenever the loan has been taken for some or the other business purposes.
The above mentioned are the benefits of availing the group loan. If you are thinking to increase your level of livelihood and if you have a group of people working with you, then you can apply for the group loan. Obviously there could be a little paperwork involved in the beginning but it also has a number of advantages which you have already read above, it can provide you with ease of everything. So without any hesitation, you can file the application and credit the loan amount in your account.