In a bustling lane, a small tailoring shop hums with the sound of stitching. The owner, who started with a single machine and a modest Joint Liability Group (JLG) loan, now has orders stacked for weeks. Across town, a Kirana store owner serves customers from morning till night, shelves brimming with goods bought on borrowed capital. Both have one thing in common, which is that their businesses have outgrown the limits of their first loans.
This is a pivotal moment for many entrepreneurs. They’ve proven their commitment, built a steady customer base, and shown discipline in repayment. But now, they face a funding gap, too big for another small group loan, not quite ready for a traditional SME loan that demands collateral and extensive paperwork. This is where Micro Individual Loans (MILs) step in offering just the right blend of accessibility and scale to fuel the next chapter of growth.
Understanding Micro Individual Loans (MILs)
Micro Individual Loans are tailored credit solutions for entrepreneurs who have already demonstrated business stability and repayment discipline, often through multiple successful group loan cycles.
- Loan sizes typically range from Rs. 50,000 to Rs. 3 lakhs, enabling meaningful growth investments.
- No collateral is required; approval is driven by repayment history and business potential.
- Flexible tenures of about 12 to 36 months align with small business cash flows.
- Processing is quicker because the borrower already has a relationship and track record with the bank.
The aim is to bridge the funding gap between microfinance and formal SME loans, giving entrepreneurs capital to expand without overwhelming them with debt.
The Transition from Group Lending to Individual Lending
Most MIL borrowers are graduates of the Joint Liability Group model. They begin in a group because it is accessible and comes with peer support. Over time, consistent repayment builds trust with the bank and confidence in managing credit independently.
- Autonomy over fund use without group oversight.
- Higher limits than typical group loan caps for more ambitious investments.
- Direct accountability that strengthens financial discipline.
The Ujjivan SFB Approach
At Ujjivan Small Finance Bank, Micro Individual Loans are designed for this progression. The product offers loan amounts suited to growing small businesses, minimal paperwork for eligible existing customers, and localised service through relationship managers who understand the borrower’s business context.
By keeping processes straightforward and approvals quick, Ujjivan helps entrepreneurs seize growth opportunities without delay.
Real-World Impact — How MILs Change Businesses
- A tailoring business adds machines and takes on bulk orders during peak seasons, doubling output.
- A grocery store installs refrigeration, stocks perishables, attracts new customers, and lifts daily revenue.
- A transport service purchases an auto-rickshaw or delivery vehicle to open new income streams.
Timely repayments on MILs also strengthen a borrower’s credit profile, making it easier to qualify for larger loans in the future, the next step toward SME financing.
Challenges and Responsibilities
- No shared liability: repayments are entirely the borrower’s responsibility.
- Larger ticket sizes mean higher EMIs, requiring careful budgeting and planning.
- Borrow within realistic repayment capacity to avoid over-leverage.
Lenders often pair credit with basic financial guidance so that growth remains sustainable.
Final Thoughts
Micro Individual Loans are not just bigger versions of group loans, they are milestones that recognise an entrepreneur’s track record, ambition, and readiness to operate independently. For many, they mark the turn from small-scale survival to scalable success, bridging the gap between microfinance and mainstream banking with the support of a trusted partner like Ujjivan Small Finance Bank.
Beyond funding, they offer validation, proof that the entrepreneur has built trust, shown resilience, and is now capable of managing greater financial responsibility. Used wisely, an MIL becomes more than credit; it becomes a stepping stone toward long-term stability, expansion, and prosperity.
