MUDRA Loan

The Pradhan Mantri MUDRA Yojana (PMMY) is a government initiative aimed at providing financial support to non-corporate, non-farm small and micro enterprises in India. Under this scheme, MUDRA Loans are offered in four categories: Shishu, Kishore, Tarun, and Tarun Plus, catering to businesses at different growth stages. These loans are designed to foster entrepreneurship and employment without requiring collateral, thereby promoting financial inclusion across the country. 

The MUDRA Loan is a financial product under the Pradhan Mantri MUDRA Yojana (PMMY), aimed at supporting small businesses and startups in India. Launched to encourage entrepreneurship and boost the non-farm sector, it extends collateral-free loans up to ₹20 Lakhs to eligible applicants. 

These loans focus on micro enterprises, artisans, shopkeepers, and small manufacturers who find it difficult to obtain finance from traditional banks. The objective is not only to fuel business growth but also to create employment and enhance economic development at the grassroots level. 

The Pradhan Mantri MUDRA Yojana (PMMY) offers accessible financial support to micro and small enterprises across India. These loans are designed to promote entrepreneurship and employment without the need for collateral. Here are some of the key MUDRA Loan details: 

• Collateral-free Loans: One of the most striking features is that no collateral or security is needed for loans up to ₹20 Lakhs, reducing the barrier to finance. 

• Flexible Loan Amounts: Businesses can get loans ranging from ₹50,000 to ₹10 Lakhs, depending on their stage and financial needs, allowing for tailored support.

• Multiple Loan Categories: The scheme includes three distinct loan products—Shishu, Kishore, Tarun, and Tarun Plus—targeting various stages of business growth.

• Wide Coverage for Business Types: It covers diverse business activities, including manufacturing, trading, service, and farming-related activities.

• Easy Application Process: Both online and offline application processes are in place, simplifying access for all entrepreneurs.

• Employment Generation: By facilitating credit access, the scheme helps generate jobs and boosts rural and urban economies.

• Affordable Interest Rates: Partner banks offer competitive interest rates compared to informal money lenders. 

• Refinance Facility: MUDRA provides refinance support to banks, NBFCs, and MFIs, enhancing the reach of the scheme. 

The Pradhan Mantri MUDRA Yojana classifies loans into four types based on the funding needs: 

1. Shishu Mudra Loan

• Loan Amount: Up to ₹50,000.

• Purpose: Ideal for startups and new businesses requiring initial capital.

• Features: Quick processing and minimal documentation.

2. Kishore Mudra Loan

• Loan Amount: ₹50,001 to ₹5 Lakhs.

• Purpose: Suited for businesses looking to expand their operations.

• Features: Flexible repayment options and competitive interest rates.

3. Tarun Mudra Loan

• Loan Amount: ₹5,00,001 to ₹10 Lakhs.

• Purpose: Designed for established businesses aiming for significant growth.

• Features: Higher loan amounts with extended repayment periods. 

4. Tarun Plus Mudra Loan

• Loan Amount: ₹10 Lakhs to ₹20 Lakhs.

• Purpose: Designed for those who have successfully repaid loans in the 'Tarun' category. 

• Features: Fund expansion and growth by providing access to more capital. 

MUDRA Loans support a wide array of business activities, promoting diverse sectors of the economy. These can include: 

• Manufacturing: Small manufacturing units like handloom, handicrafts, food processing, and cottage industries.

• Trading: Shopkeepers, vendors, hawkers, and small traders fall under this category.

• Services: Auto-repair, beauty parlours, food stalls, tailoring, and other small-scale service providers.

• Farming: Allied agricultural activities like dairy, poultry, fishery, bamboo and cocoon production.

• Professional Service Providers: Self-employed professionals such as doctors, lawyers, and accountants can also avail of loans under certain criteria. 

Here’s a quick overview of who can apply for loans under the Pradhan Mantri Mudra Yojana, including individuals, startups, and small businesses across various sectors.

• Indian citizens aged between 18 and 65 years

• Individuals involved in non-farm income-generating activities

• Micro and small enterprises in manufacturing, trading, and services

• Startups and new entrepreneurs with a viable business plan

• Existing businesses seeking working capital or expansion

• Street vendors, shopkeepers, artisans, and repair service providers

• Transport operators, including auto-rickshaw drivers and small fleet owners

• Beauty parlours, tailors, tuition centres, and similar service-based setups

• Special preference for women entrepreneurs and those from SC/ST/OBC categories

• Applicants must have no history of loan default

• Applications accepted via banks, NBFCs, and microfinance institutions registered under PMMY

To be eligible for a PM MUDRA Loan, applicants must satisfy several criteria which include:

• Indian Resident: The applicant must be an Indian citizen engaged in a non-farm income-generating activity.

• Type of Business: The business should be non-corporate, non-farm, and engaged in manufacturing, trading, or services. 

• Business Vintage: For Shishu Loans, the business should be in the initial stage of development. For Kishore and Tarun Loans, the business should be established and operational. 

• Loan Amount: The amount sought should not exceed ₹10 Lakhs (or ₹20 Lakhs for the Tarun Plus Loan category).

• Sector Exclusions: Activities related to real estate and capital market investments are not eligible.

• Age of Applicant: The applicant should be at least 18 years old. 

• Repayment Capacity: The applicant should have the ability to repay the loan within the stipulated time frame. 

• No Prior Default: Applicants should preferably have a clean credit history without defaulting on loans.

• Documentation: The applicant must provide necessary documents, including identity proof, address proof, and business-related documents. 

Loan sanction under MUDRA Yojana requires submission of certain documents which vary slightly as per loan category. 

For Shishu Loan

Applicants seeking a Shishu Loan (up to ₹50,000) are generally required to provide:

• Identity Proof: Aadhaar card, voter ID, passport, or any government-issued ID.

• Address Proof: Utility bills, rental agreement, or any document confirming the current address.

• Business Proof: Shop and Establishment Act registration, GST registration, or any document validating the business.

• Income Proof: Bank account details or IT returns, to assess repayment capability. 

• Photographs: Passport-sized photographs of the applicant. 

Note: The upfront fee/processing charges for Shishu Loans are waived by most banks. 

For Kishore, Tarun and Tarun Plus Loan

For Kishore, Tarun, and Tarun Plus Loans (₹50,000-₹20 Lakhs), apart from all the documents required in Shishu loan category, you may also need to provide the following: 

• Business Financials: Profit and Loss statement, balance sheet, and income tax returns for the last 2-3 years.

• Bank Statements: Bank statements for the last 6 months.

• Project Report: Detailed project report outlining the business plan, objectives, and financial projections.

• Collateral Documents: Documents related to assets offered as collateral (if applicable).

• Other Documents: GST registration and CIBIL Report (may be required by lender). 

Note: The specific documents required may vary depending on the bank or financial institution. 

Applying for a MUDRA Loan online is a straightforward process aimed at facilitating easy access to financial support for small businesses.

Steps:

1. Visit the Official Portal: Navigate to the Udyamimitra portal to begin your application. 

2. Register or Log In: Create a new account or log in if you already have one.

3. Select Loan Type: Choose the appropriate loan category (Shishu, Kishore, or Tarun) based on your business requirements.

4. Fill Application Form: Complete the online application form with accurate details about your business and personal information.

5. Upload Documents: Attach necessary documents such as identity proof, address proof, and business-related documents.

6. Submit Application: Review all information and submit your application for processing.

Note: Processing times may vary depending on the lending institution.

For those preferring a traditional approach, applying for a MUDRA Loan offline involves visiting a nearby lending institution. 

Steps:

1. Identify Nearby Lending Institutions: Locate a bank, Non-Banking Financial Company (NBFC), or Micro Finance Institution (MFI) that offers MUDRA Loans.

2. Obtain Application Form: Collect the loan application form from the institution's branch or download it from their official website.

3. Complete the Form: Fill in the application form with accurate information about your business and personal details.

4. Prepare Documents: Gather required documents such as identity proof, address proof, and business-related documents.

5. Submit Application: Submit the completed application form along with the necessary documents to the lending institution.

6. Await Processing: The institution will process your application and inform you of the loan approval status.

Note: Processing times may vary depending on the lending institution.