To obtain a MUDRA loan, recipients will receive a debit card called the same. As soon as the applicant submits their form and it is approved by the lender or bank, a Mudra loan bank account will be opened and the card provided to them; the sum of sanctioned money is subsequently given to this account.
This process assists in tracking credit history for those who applied for funding from either lender or bank. It’s conceivable to view such details connected to this Mudra card online at its official website.
You may like to read: Why Business Loans are Financially Beneficial for MSMEs
The MUDRA Loan Scheme was brought about by the Indian government in 2015. The acronym MUDRA reflects Micro Units Development and Refinance Agency.
This plan is also known as PMMY or Pradhan Mantri Mudra Yojana. It is an endeavor by the Government of India intended to supply financial aid to individuals, MSMEs, and SMEs. The MUDRA Loan is divided into three loan program classifications: Shishu, Kishor, and Tarun.
These loans don’t necessitate any security since they are collateral loans supplied by non-banking financial companies (NFBs) and banks with payment terms ranging from 36 months to 5 years (as applicable) that have flexible EMIs customizable to suit citizens’ requirements.
Pradhan Mantri Loan Yojana (PMMY) offers three types of loans. They are labeled as Shishu, Kishor, and Tarun categories. Here is more information about them:
- The SHISHU loan is a limited loan amounting to Rs. 50,000 meant for businesses and start-ups. It is also known as the Mudra Shishu Loan scheme.
- KISHOR Loan enables a person to obtain between Rs. 50,001 and Rs. 5,00,000 for raw materials or machinery for expanding their business. This category of loan is suitable for those wishing to upgrade or expand their existing enterprise.
- The final loan option available is the TARUN Loan, which allows one to apply for a loan from Rs. 500,001 up to Rs. 10,00,000. This type of loan is intended for those who own an established business or enterprise.
The key features of a Mudra loan are listed below:
The advantages of a Mudra loan are:
- Primarily, traders, shopkeepers, and vendors receive Mudra loans. Those involved in trade, manufacturing, and service industries in MSMEs may also apply for such loans.
- India’s Government back the Mudra schemes with Credit Guarantee Schemes.
- The amount borrowed as a Mudra loan can also be used as an overdraft or term loan.
- Micro-firms and small enterprises conducting income-generating activities can benefit from Mudra loans.
- Members of SC/ST communities are eligible for loans at discounted interest rates.
- Mudra loans can also be accessed with Mudra cards.
The following are types of businesses eligible for MUDRA Loans that participate in some form of income-generating activities.
- For anyone looking to buy any type of commercial transport vehicle like e-rickshaws, auto-rickshaws, taxis, tractors, trollies, or 3-wheelers, Mudra finance for machinery and equipment is available for purchase.
- If someone wants to start a service-based business, like a gym, medical store, beauty parlor, etc., Mudra Loans are available for needed funding.
- Businesses doing activities in the food and textile industries are eligible for loans catered to those sectors.
- If an individual desires to operate a business or shop for trading and other non-farm income-earning activities, they can get loans for that purpose.
- A total loan of up to Rs. 10 lacks can be offered under the Equipment Finance Scheme for Micro Units to obtain machinery, etc.
- Individuals can apply for Mudra Loans to finance businesses linked to agri-allied activities such as those found at agribusiness centers and agri-clinics, food & agro-processing units, organization of sorting, poultry farming, beekeeping, livestock-rearing, dairy business, and aggregation of agro-industries.
The Mudra loan application form is accessible on the official website and can be downloaded by any person who can fill in the needed information. Varied forms of submitting applications are specified by different banks.
An individual must go to the chosen bank he or she wants to get the Mudra loan from, submit the downloaded and filled form, and then finish with the bank’s paperwork.
A startup business can easily get a MUDRA Yojana loan with the following five-step process:
To get the scheme application form, a person needs to visit the closest bank branch related to the scheme. The MUDRA portal gives a list of lending organizations part of this program.
Second step: The candidate must then fill out the application form and submit it with the accompanying documents.
Third Step: The borrower must provide documents such as proof of residency, identity, business address, a photograph of the applicant, and proof of the type of business. Other documents may be requested based on the loan type applied for.
Step 4: Unlike other loans, PMMY loans have no processing fees and don’t require collateral, so applicants won’t have to worry about any bank charges.
After being approved for the loan, recipients get a MUDRA Card, similar to a credit card, in Step 5.
The interest rates are based on:
- Loan repayment capacity
- Report compiled by the applicant for business purposes
- Credit score
- Previous year’s bank statement
- Condition of existing business
- Checking if the applicant has any unpaid past loans
- Loan paying tenure
- It depends on the bank.
- What the applicant is using the loan for
Some of the necessary documents for a Mudra Loan include:
- The applicant’s business plan
- Filled out and signed the application form that is finished
- 2 current passport-sized photos
- Voter’s ID card, Passport, Aadhar Card, PAN card, Driving License, and Utility Bills (Electricity or Water Bills) must be provided by the borrower and any other co-applicants for KYC purposes.
- Moreover, the evidence must be produced to demonstrate that a job applicant fits into the specific category of ST, SC, OBC, Minority, or other (if applicable).
- Bank statements from the past six months
- Proof of the address of the business and. if applicable, evidence of its active operation duration
- Any supplemental documents asked for by the bank or lender.
How long does it usually take for a Mudra Loan to get approved?
Generally, it takes about 7-10 working days for the lender or bank to approve a Mudra loan under the PMMY scheme.
Is collateral or security necessary for a Mudra Loan under the Prime Minister’s MUDRA Yojana (PMMY)?
Banks and lenders do not require any collateral or security when applying for Mudra Finance.
Do I need to file an ITR in order to get a Mudra Loan?
When applying for MUDRA loans, salaried professionals or businesses must provide their previously filed income tax returns as part of the application process.
What is the process for checking one’s Mudra loan application status?
Easily check your Mudra loan application status by navigating to the bank’s or lender’s website and selecting the “e-mudra loan application status” button.
Can people from metropolitan cities apply for the Mudra Loan Scheme?
All types of non-agricultural MSMEs or Micro, Small, and Medium Enterprises across India in urban, metro, semi-urban, and rural areas can qualify for the Mudra loan.
Is it possible to apply for a Pradhan Mantri Mudra Yojana loan (or PMMY) for food-related startups?
You can apply for a Mudra loan to start a new food-related business under Rs. 10 lacks, excluding agricultural needs. The interest rate will depend on the applicant’s profile, the requirements of the business, the length of repayment time, and more.
Is there a specific loan scheme offered by the Mudra scheme for female entrepreneurs?
The UMUY or United Mahila Udyami Yojana is an option available specifically for female entrepreneurs who wish to apply for a Mudra loan. This scheme is available for women who are engaged in production, service-related, manufacturing, or other economic activities.
Does the United Mahila Udyami Yojana under the MUDRA loan include female co-shareholders?
Female co-shareholders can qualify for the United Mahila Udyami Yojana financing provided by MUDRA loan if they hold more than a 50% stake in the company.
What are the different financial institutions that assist with Pradhan Mantri Mudra Yojana (PMMY)?
Mudra loans are given to multiple financial institutions in accordance with the RBI’s directions, such as public and private sector banks, MFI or Micro Finance Institutions, regional rural banks, and more.
What are the necessary features for women entrepreneurs to obtain a Pradhan Mantri Mudra Loan (PMMY)?
The following are some of the key features of the Mudra loan under the PMMY scheme for female entrepreneurs:
- Mudra loans can be divided into 3 categories: Shishu (loans up to Rs 50,000), Kishor (loans between Rs 50,001 to Rs 5 lakh), and Tarun (loans above 5 lakhs and below 10 lakhs).
- There isn’t a minimum amount you have to borrow.
- You can borrow up to Rs. 10 lacks for this loan.
- This loan does not require any collateral.
- You can choose to repay the loan within a period of 3 to 5 years.
Is it possible for Non-Resident Indians to apply for this loan scheme?
Non-Residents of India are not able to take advantage of this scheme.
