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Tata Capital > Blog > Generic > The Role of Microfinance Loans in the Kumar Family’s Business Breakthrough


The Role of Microfinance Loans in the Kumar Family’s Business Breakthrough

The Role of Microfinance Loans in the Kumar Family’s Business Breakthrough

Microfinance loans provide essential financial services to individuals and groups without access to traditional banking. These loans support self-employed entrepreneurs in rural areas, such as farmers and small traders, helping them start or grow businesses and achieve financial independence.

The Kumar family from Heempur Deepa, Bijnor, is a prime example of the impact of microfinancing. Facing numerous challenges, Akash Kumar and his wife Radha transformed their struggling shop into a thriving business with the help of a microfinance loan from Tata Capital. 

This article details their journey, showcasing how microfinance helped them overcome financial challenges and improve their lives.

About the Kumar Family

Akash Kumar and his wife Radha live in Heempur Deepa, a small village in Bijnor. They belong to a large family, including Akash's four brothers and parents. They have two young children, a six-year-old daughter and a one-and-a-half-year-old son. For the past six years, Akash has managed the family business, “Mandeep Matching Centre,” a small shop selling cloth pieces, cosmetics, bangles, and other items.

What were the Challenges Faced by the Kumar Family?

Despite running an established family business, the Kumar family faced several challenges. Their primary issue was the shop’s small size, which limited their ability to stock popular items, often leaving customers empty-handed.

They also struggled financially, earning only Rs. 500 to Rs. 1,000 daily, which wasn't enough for household expenses and their children's education. Living in a village made it difficult to access loans, forcing them to borrow money from local lenders at high monthly interest rates of 5%.

However, their situation improved when they learned about the Joint Liability Group for Women. Through this group, they secured a Pragati loan from Tata Capital, which helped them overcome their financial challenges.

What is a Pragati Loan, and How Did it Benefit the Kumar Family?

A Joint Liability Group consists of 8-10 women who support each other financially and share the responsibility of loan repayment. Once you join this group, you become eligible for a Pragati loan. 

Pragati Loan is a type of microfinance loan offered by Tata Capital. This loan is designed to support economically active women in low-income areas. Here are a few key advantages that the Kumar family benefited from by securing a Pragati loan:

  1. Substantial loan amount - The Kumars received a high loan amount of Rs. 45,000.
  2. Flexible repayment tenure - Unlike local lenders who demand lump-sum repayments, Tata Capital offers a long repayment tenure of up to three years, allowing Kumars to repay the loan comfortably.
  3. Quick processing - Within two days, the sanctioned loan amount was disbursed into the borrower's account, helping them make the required changes quickly.

What Impact Did Microfinance Loans Have on the Kumar Family Business?

The Pragati loan had a transformative impact on Akash and Radha's business, allowing them to make several critical improvements:

  1. Shop expansion - The loan allowed them to remove a wall, increasing the shop's size. This expansion provided more space to display and store various products.
  2. Increased stock - With the additional space, they could stock more items that were in high demand, attracting more customers and boosting sales.
  3. Improved lifestyle - With better sales and income, they could provide better education and facilities for their children, improving their family's quality of life.

The Bottom Line

With the help of a microfinance loan, the Kumar family no longer had to rely on local lenders. They achieved their goal of expanding the shop, providing better education for their children, and improving their quality of life. 

If you run a business like the Kumars and lack the funds to increase your stock, buy new equipment, or expand your shop, turn to Tata Capital. We offer microfinance loans with flexible repayment terms of up to 36 months, a high loan amount ranging between Rs. 50,000 and Rs. 1,00,000, and attractive interest rates to help you achieve your business goals.
So what are you waiting for? Visit the Tata Capital website or download the Tata Capital App to apply for a microfinance loan today.

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