Mudra Loan

What is Mudra Loan?

What are the features of the Pradhan Mantri Mudra Yojana?

The Mudra loan has a number of defining features that make it one of the best financial products offered by the Government of India. Here’s a look at the primary characteristics of this loan.

• This is essentially a working capital term loan.
• It can be used for a variety of purposes, including capacity expansion, modernization, meeting working capital requirements, purchase of plant and machinery, and renovation of business premises, among others.
• The loan is offered to both new and existing units.
• The target group of the Pradhan Mantri Mudra Yojana includes businesses involved in manufacturing, trading, or providing services. This is inclusive of allied agricultural activities.
• The repayment period ranges from 3 years to 5 years.
• An eligible enterprise can avail the Mudra loan onine.

What are the products under PMMY?

The PMMY scheme offers 3 products to eligible entities, namely Shishu, Kishore, and Tarun. The details of these three products are explained here.

Shishu loan

Shishu loans under the Mudra scheme allow entrepreneurs on the threshold of starting a business to borrow up to Rs. 50,000. The following details need to be furnished to avail this loan.

• Quotation of machinery and other items that need to be purchased
• Details of plant and machinery purchased
• Details of the supplier providing the plant and machinery

Kishore loan

Kishore loans range from Rs. 50,001 to Rs. 5,00,000. They’re ideal for businesspersons who require additional funds for expanding their trade. Here’s a checklist of details and documents needed.

• Balance sheet of the business pertaining to the two previous financial years
• Income tax and sales tax returns
• Bank account statements for the previous 6 months
• Estimated balance sheet for the next 1 year or for the duration of the loan sought
• Memorandum of association and articles of association, if applicable
• Sales made in the current financial year before applying for the Mudra loan
• A report exploring the technical and economic sustainability of the applicant’s business

Tarun loan

Tarun loans under the PMMY scheme range from Rs. 5,00,001 to Rs 10,00,000. Business owners who wish to avail a Tarun loan need to furnish these documents, in addition to the details required for applying to Kishore loans.

• Proof of address
• Proof of identity
• Certificate of SC, ST, OBC, as applicable

With the PMMY scheme, you can borrow up to Rs. 10 lakhs. If your business is in need of more capital or funds, or if you don’t qualify to borrow under the PMMY scheme, you could always avail a business loan on Finserv MARKETS. On Finserv MARKETS, you can apply for loans as high as Rs. 30 lakhs without the need to provide any collateral. The process from application to disbursal is also quick and easy, since there’s minimal documentation involved.

Mudra Loan Eligibility

The Pradhan Mantri Mudra Yojana (PMMY) was launched by the Prime Minister of India on April 8, 2015. An acronym for Micro Units Development and Refinance Agency (MUDRA), this is an institution set up by the government to fund the income-generating activities of micro and small enterprises in the non-farming, non-corporate sector. The Mudra loan scheme, offered as a part of the Pradhan Mantri Mudra Yojana, allows eligible enterprises to borrow funds as high as Rs. 10 Lakhs.

To know more details on availing a Mudra loan, checkout our mudra loan eligibility page.

Purpose of Mudra Loan

The Micro, Small and Medium Enterprises (MSMEs) have contributed significantly to the growing economy of India. In addition to that, MSMEs also play a crucial role in generating job opportunities across the nation. Keeping all these factors in mind, the Indian Government has established Micro-Units Development and Refinance Agency (MUDRA) to offer financial support to small businesses and startups in India.

MUDRA loan is approved and disbursed by public and private banks and NBFCs registered under this scheme. The primary benefit of this loan is that it is provided without any collateral. The capital obtained from a MUDRA loan scheme can be utilized to grow and expand businesses.

The table below displays the number of loans sanctioned under the PMMY scheme in the past few years.

Mudra Loan Interest Rates & Charges

The Pradhan Mantri Mudra Yojana (PMMY) scheme allows eligible MSME/ SME to borrow funds as high as Rs. 10 Lakhs. The interest rates on Mudra Loan vary from bank to bank and depend on the applicant’s profile and business requirements.

On Mudra loan, for an amount of up to Rs. 50,000/-, no processing fee is applicable.

10% of interest rate and processing fee of 0.50% (plus additional taxes) is applicable on the loan amount of Rs. 50,001/- to Rs. 10,00,000/-

Benefits of Taking a Mudra Loan

• The primary benefit of Mudra loan is that this loan is provided without any collateral. This makes MUDRA loans unsecured loans
  

• The interest rate of Mudra Loan doesn’t exceed 1.00% per month and it also depends on the base lending rates of the lender.
  

• Beneficiaries do not have to visit the bank for withdrawal of the loan amount. This can be done by using the Mudra Loan Card.

Knowing these benefits of MUDRA loan will help you make the most of it for the growth and expansion of your small business. Make sure that you check the eligibility criteria before applying for MUDRA loan. This will help you avoid any inconvenience in the later stage.

How To Apply for Mudra Loan

Here are the steps to apply for mudra loan:

Step 1: To apply for a Mudra Yojana Loan make sure you have the necessary documents required such as ID proof, address proof, and business proof.

Step 2: Find a lender registered under the Mudra scheme and fill in the application form.

Step 3: Submit the Mudra loan application form along with the relevant documents.

Step 4: Once your loan is approved, you will receive a MUDRA card, through which you can withdraw the amount.

To know more on Mudra Loan Application Procedure, visit Mudra Loan Apply Section only at Finserv MARKETS

Mudra Loan Card

MUDRA Card is an innovative product which makes credit easily accessible to small businesses while providing flexibility to the card owner. It can be used as a credit card with an overdraft (loan) limit and can also be used as a debit card with the facility of ATM withdrawals. The borrower can make use of a MUDRA Card to make multiple withdrawals and credits. This card also helps in digitalization of MUDRA transactions and creating credit history for the borrower.