How to Get a Loan from the Ehsas Program?
The Ehsas program launched by the Government of Pakistan aims to alleviate poverty and empower the country’s underprivileged citizens.
One of the pillars of this program is the Ehsas Interest-Free Loans scheme, which provides interest-free loans to poor and needy people so they can start their own businesses and pull themselves out of poverty.
Getting a loan from Ehsas Interest-Free Loans is simple, provided you meet the eligibility criteria. Here is a step-by-step guide on how to apply for and get a loan from Ehsas Interest-Free Loans:
Eligibility Criteria
To be eligible for an Ehsas Interest-Free Loan, you must:
- Be a citizen of Pakistan
- Have a valid CNIC
- Fall under the ‘poor’ category as per the Poverty Scorecard Survey
- Be between the ages of 18-45 years
- Be mentally sound
- Not be an existing or previous defaulter of any loan
- Have no active UCS loan
How to Apply
Follow these steps to apply for an Ehsas Interest-Free Loan:
1. Get Your Poverty Scorecard Survey Done
The first step is to complete your poverty scorecard survey. This survey analyses your poverty status and gives you a poverty score. To complete it, visit your nearest Ehsas survey enumeration team and provide them with your CNIC details.
The survey team will visit your household, ask questions about your socio-economic status, and compute a poverty scorecard. If your score falls in the poor category, you become eligible for the Ehsas Interest-Free Loan.
“There is always Light behind Darkness” – Rumi
2. Select A Business
Once declared eligible, select a business activity for which you wish to start with the loan amount. Some popular businesses opted by Ehsas loan beneficiaries include:
- Small grocery store
- Mobile repairing workshop
- Tailoring shop
- Embroidery business
- Livestock rearing
Select a business that aligns with your skills, interests, and local market demand. Conduct a basic market survey to determine if the business is viable in your area.
3. Get Recommendation Letter
After selecting the business, visit your area’s Ehsas loan committee (also called MDMA) and submit an application for the loan.
The loan committee will verify your documents and ask you to get a recommendation letter from any one of the following people:
- An elected representative of your community
- An employee of the education or health department
- An active borrower of Akhuwat/Ehsas loans who have repaid 50% of their loan
This letter should recommend your name for the Ehsas Interest-Free Loan and confirm that you belong to the poor segment of society.
4. Submit Application
Once you get the recommendation letter, submit your complete application to the Ehsas loan committee along with these documents:
- Photocopy of your CNIC
- Poverty Scorecard
- Recommendation Letter
- Business Plan/Proposal
Your application will be reviewed by the committee, and you’ll be informed if you have been selected for the loan.
5. Receive Loan
If approved, you will be asked to open an account at Bank Alfalah, where the loan amount will be transferred. The standard loan size is Rs. 20,000, but it can go up to Rs. 75,000 in certain cases.
You’ll also be asked to submit one personal guarantee who will sign as a witness to the agreement. This guarantee can be a family member or someone well-reputed in your locality.
Once all documentation is complete, the loan amount will be disbursed into your Bank Alfalah account within 5-7 days.
Loan Repayment
The Ehsas Interest-Free Loan will be repaid within 1 year in 12 equal monthly installments. The repayment starts after an initial grace period of 1 month from receiving the loan.
To repay the loan, you can deposit your monthly installments at designated bank branches nominated by Ehsas. Make the repayments on time to avoid any penalties or being blacklisted for future loans.
If you face genuine challenges in repayment, you can visit the Ehsas committee and apply for an extension or rescheduling of loan repayment. However, such relaxations are only provided for valid reasons on a case-to-case basis.
Tips for Successfully Getting & Repaying The Loan
Here are some useful tips to get your Ehsas Interest Free Loan approved and repay it successfully:
- Have a strong business plan. Clearly explain in your application how you will use the loan amount, expected costs, and profits. This gives confidence that you will repay on time.
- Use the loan only for the approved business – Do not spend the loan amount on other household expenses. Stick to your business proposal.
- Maintain records – Keep receipts and records of purchases made with the loan amount. This is needed in case of audits.
- Be disciplined in repayment – Defaulting or delays in loan repayment will blacklist you from future loans. Repay on time every month.
- Pay extra installments if possible – This reduces your overall repayment period. Even small early repayments are appreciated.
- Seek help if needed. If you face repayment issues, immediately contact the Ehsas committee. Do not hide or run away from problems.
The Ehsas Interest-Free Loan is a unique opportunity to break free from the shackles of poverty. It can empower you to stand on your own feet and support your family through a sustainable livelihood. Follow the tips above and repay your loan responsibly. You will then become a role model for others in your community.
Documentation Required
When applying for an Ehsas Interest-Free Loan, you must submit certain documents. Here is a list of the major documents required:
CNIC Photocopy
This is the first and most important document needed. Provide a photocopy of your valid computerized national identity card (CNIC). It should clearly show your full name, ID card number, and other personal details.
Poverty Scorecard
Submit your original poverty scorecard, which was issued after the survey. It should show your poverty score and declare you eligible for the Ehsas Interest-Free Loan.
Business Proposal
Prepare a one-page business proposal detailing what business you wish to start, how you will use the loan amount, expected costs, and profits.
Recommendation Letter
Provide the original recommendation letter from an eligible person confirming your eligibility and need for the interest-free loan.
Personal Guarantee Form
Fill out the personal guarantee form with details of the person who will be your guarantor for repayment of the loan. Get their signature on this form.
Bank Account Details
Provide photocopies of your valid Bank Alfalah account, which will be used to disburse the approved loan amount.
Previous Loan Details
Provide reference numbers and repayment details if you have taken any previous loan from Akhuwat or other microfinance sources.
Preparing these documents will make your loan application and approval process faster and smoother. Comply with all documentation guidelines of the Ehsas program. Submit clear, legible photocopies of all required documents.
Utilizing The Loan Optimally
Getting an Ehsas Interest Free Loan is just the first step. Utilizing the loan optimally for your business is equally important to reap its full benefits.
Here are some tips on how to make the best use of your Ehsas loan amount:
Do Your Homework
Conduct proper research before utilizing the loan for your business. Understand the costs involved, profits you can make, competitors’ landscape, marketing strategies, etc. Don’t make investment decisions blindly.
Make A Business Plan
Make a simple business plan that includes your goals, target market, projected finances, repayment structure, and timelines. Use this plan to guide your business activities.
Start Small
Don’t try to start a huge business right away. Start small and focus on the basics. Once you gain experience, you can expand gradually.
Manage Finances
Maintain records of all business expenses and income. Keep loan utilization and repayments separate. Practicing financial discipline is key.
Invest Wisely
Spend on business assets carefully and prioritize investments well. For example, focus first on buying basic equipment rather than the decor.
Be Patient
Do not expect profits and growth overnight. Be patient and persistent, especially in the initial stages of your business. Stay committed.
Take Expert Help
If needed, get guidance from experts in your field when making specific business decisions and challenges. Don’t hesitate to ask for help.
Proper planning and execution are essential to making your Ehsas loan fruitful for your business and repayment capability. Follow these tips to utilize your loan smartly and make your entrepreneurial journey successful.
Common Challenges Faced
Setting up a business with the Ehsas Interest-Free Loan can be very rewarding. However, some common challenges may arise during your entrepreneurial journey. Being prepared to handle such challenges is important. Some key difficulties faced are:
Lack of Business Experience
First-time entrepreneurs supported by Ehsas loans often lack exposure to managing a business. The absence of skills like financial planning, marketing, and inventory management affects the business. Proper basic training should be provided.
Understanding Local Market Dynamics
Without market research and an understanding of customer preferences, product pricing, competitors, etc., it is difficult to grow the business. Mentor support can guide you in this process.
Limited Loan Amount
The standard Rs. 20,000 loan amount may be insufficient to start certain businesses after costs like raw materials, equipment, etc. Borrowers should use the amount diligently.
Family & Social Pressures
Family responsibilities, social customs like marriages, and health expenses sometimes overburden loan borrowers. This affects their capacity to run the business and repay installments.
Lack of Proper Guidance
Many Ehsas borrowers find the loan useful for starting a business but lack proper ongoing mentoring. Handholding services should be provided.
Natural Calamities
Emergencies like medical contingencies, family death, or natural disasters also impact repayments. Borrowers should plan risk mitigation for such events.
By understanding these challenges and planning for them, Ehsas borrowers can run their businesses more successfully. Seeking help from the Ehsas committees is also vital to resolving difficulties.
Monitoring Utilization of The Loan
The Ehsas program has certain monitoring mechanisms in place to ensure loans given out are properly utilized by borrowers for productive purposes. Some key ways loan utilization is monitored:
Random Audits
Surprise checks are conducted on a random sample of borrowers to verify if loans are used only for approved business activities.
Field Visits
Loan officers regularly visit borrowers to check if the stated business is operational and if loan amounts have been invested in it.
Utilization Documentation
Borrowers must submit purchase receipts, invoices, and inventory details to show that they use loans for business-related investments.
Loan Tracking Software
End-to-end tracking of loan disbursal and repayment is done through customized software for monitoring purposes.
Borrowers Conferences
The Ehsas committee organizes review meetings, during which borrowers share progress and challenges and learn from each other’s experiences.
Recommendation Letter
The mandatory recommendation letter prior to loan approval certifies the borrower belongs to the poor segment and shall appropriately use the loan.
External Auditors
Third-party chartered accountant firms also conduct periodic audits on random borrower samples to identify any misuse of loans.
Close monitoring ensures loans are not misused, improving overall credit discipline. This makes the program more sustainable and benefits a larger number of deserving borrowers.
Options for Those Who Default on Loan Repayment
The Ehsas Interest-Free Loan is meant to uplift economically weaker sections. However, some borrowers may face challenges and default on timely repayment of their loan installments. In such cases, here are some options available:
Request Rescheduling of Loan Tenure
Borrowers can approach the Ehsas committee and request an extension of the loan repayment period from 1 year to 18 months or 2 years. This reduces the monthly repayment burden.
Apply for Installment Restructuring
Instead of standard equal monthly installments (EMI), borrowers can request to pay smaller variable amounts over initial months and higher installments subsequently when business income improves.
Seek Partial Loan Amount Waiver
In exceptional cases, such as the death of a borrower or the loss of business assets due to unavoidable reasons, borrowers can apply for a partial waiver of outstanding loan amounts.
Arrange for Personal Guarantor
A family member or friend can stand as a guarantor and take responsibility for the repayment of outstanding loan amounts through their own sources.
Liquidate Business Assets
Borrowers can consider selling some non-critical business assets or inventory to arrange funds for pending installments.
Avail Top Up Loan
Once 50% of the original principal is repaid, borrowers become eligible for a ‘top-up’ loan. This additional loan can help settle previous dues.
While options are available, borrowers should try to regularize repayments and not default willfully. The Ehsas committee handles genuine issues empathetically on a case basis.
Graduation from Ehsas Loans to Commercial Loans
The ultimate aim of the Ehsas Interest-Free Loan is to enable beneficiaries to graduate from micro-loans to larger commercial loans over time as their businesses prosper. Here is how this graduation takes place:
Develop Credit History
By taking and repaying Ehsas loans responsibly, borrowers develop a positive credit record, making them eligible for bigger loans from commercial banks.
Gain Financial Skills
Managing an Ehsas loan-funded enterprise equips borrowers with essential skills, such as cashflow planning, account keeping, inventory management, etc., that are helpful in scaling up.
Acquire Formal Training
Ehsas committees should facilitate skill-based training for promising borrowers to enhance their business acumen and financial literacy.
Build Assets
Successful utilization of successive Ehsas loans creates tangible assets like machinery, livestock, and shop premises, which raises the borrower’s credibility for larger loans.
Maintain Income Growth
As business income levels rise with each loan cycle, borrowers can take loans of higher ticket sizes from commercial sources.
Get Bank Linkages
Ehsas program should facilitate linkages between graduated borrowers and partner banks, which can then finance the next phase of their business growth.
Set Bigger Goals
From microenterprises, capable borrowers should expand their vision to small-medium enterprises, shift to new locales, diversify into multiple products, etc., with commercial loans.
The careful transition from Ehsas loans to mainstream financing is integral to creating truly empowered entrepreneurs. The graduation approach gives wings to the dreams of perseverant borrowers.
| S.No | Loan Feature | Details |
|---|---|---|
| 1 | Loan Amount | Rs. 20,000 to Rs. 75,000 |
| 2 | Tenure | 12 months |
| 3 | Mode of Disbursement | Direct transfer to borrower’s Bank Alfalah account |
| 4 | Installments | 12 equal monthly installments |
| 5 | Grace Period | 1 month |
| 6 | Late Payment Penalty | Rs. 100 per month |
| 7 | Eligibility | Must be certified ‘poor’ in poverty scorecard survey |
| 8 | Interest Rate | 0% |
Table: Key Features of Ehsas Interest-Free Loan
The Ehsas Interest-Free Loan program aims to uplift marginalized sections of society by enabling them to start small enterprises. The interest-free loans create opportunities for sustainable self-employment.
Who Can Apply For the Ehsas Scholarship?
Ehsas scholarships are available to deserving students from low-income families studying in public sector universities. Eligibility criteria include household poverty status, academic merit, and the applicant’s financial need.
How To Apply For the Ehsas Program?
To apply for the Ehsas program, visit your nearest Ehsas registration center with your original CNIC, fill out the required form, complete a socio-economic survey, and submit documents per the scheme you are applying for.
How To Apply To the Ehsas Program?
Applications for Ehsas program schemes can be submitted online at their portal or by visiting designated Ehsas registration centers in your city. Follow their application process and submit the required documents.
How To Get an Ehsas Program Loan?
To get an Ehsas interest-free loan, complete your poverty survey, choose a business, get a recommendation letter, and submit your application to the local Ehsas loan committee with your business proposal and documents.
Can the Ehsas Programme Be Taken By Sending Documents?
No, Ehsas schemes require in-person registration at their centers. Documents can only be sent after registering yourself in the program through their application process.
Can I Apply For the Ehsas Youth Scholarship For a Master’s?
Currently enrolled master’s students in HEC-recognized public universities who meet merit and need criteria can apply for the Ehsas Undergraduate Scholarship program.
Can students of M.A. Apply For the Ehsas Scholarship?
Yes, students pursuing master’s programs like M.A. can apply for the Ehsas Undergraduate Scholarship if they meet the eligibility criteria, which include household poverty status, academic record, and financial need.
Can We Receive Both Speed And Ehsas Scholarship?
No, students cannot apply for both the SPEED and Ehsas undergraduate scholarships together, as per policy. You can only apply for one based on the eligibility criteria.
Can We Receive Both Peef And Ehsas Scholarships?
No, concurrent scholarships are not allowed. Students can only avail of one—either the Punjab Education Endowment Fund (PEEF) or the Ehsas undergraduate scholarship, based on eligibility.
Are Comsat University students also eligible for the Ehsas Scholarship?
Yes, COMSATS university students can also apply for the needs-based Ehsas undergraduate scholarship program if they meet the merit, poverty scorecard, and other criteria.
How Can I be Eligible For the Ehsas Scholarship?
If you are eligible for the Ehsas undergraduate scholarship, visit ehsas.hec.gov.pk to create your profile. Fill out the online application form and submit it with supporting documents before the announced deadlines.
How Can I Get into the Ehsas Program in Karachi?
To register for the Ehsas program in Karachi, visit their center at Jinnah Convention Centre, apply through the required process, and get your socio-economic profiling done to assess eligibility for applicable schemes.
How Do I Get A Loan From The Ehsas Program?
To get an interest-free loan from Ehsas, first, get your poverty scorecard made, choose a business idea, obtain a recommendation letter, and submit your application to the Ehsas loan committee with your CNIC, scorecard, and business proposal.