The buzz among entrepreneurs these days is, "What is Mudra loan all about?". India is home to a large number of MSME's. Moreover, the number is growing each day. Also, it looks highly promising as it can contribute to India's economy. However, many of these businesses come to halt due to a lack of funding. Henceforth, the Government of India since 2015 has arranged for a scheme for smooth flow of aid to such MSME's. It is called Pradhan Mantri Mudra Yojana(PMMY). We discuss its features in this article for the benefit of our readers. Let's begin!
What is Mudra Loan?
Pradhan Mantri Mudra Yojana thus aims to help small-scale companies in India with monetary support so that they can achieve their potential and flourish. It was launched on 8th April 2015 to help such enterprises. Also, MUDRA is an acronym for Micro Units Development and Refinance Agency.
Moreover, it consequently helps companies from the profit and not-for-profit sector as well. Thus, all eligible companies and individuals wishing to get this loan in essence can avail of the help of up to Rs. 10 lakhs. Subsequently. some of the eligible companies include,
1. NBFC's (Non-Banking Financial Companies)
2. MFI's (Micro Finance Institutions)
3. RRB's (Railway Recruitment Boards)
4. Small Finance Banks
5. Commercial Banks
Types of Industries that can apply for this loan
Here are some of the industries that can apply for such loans,
1. Handicraft artisans
2. Business vendors
3. Repair shops
5. Food production industries
6. Small scale manufacturers
7. Agriculture sector
8. Services companies
10. Self-employed entrepreneurs
Salient features of such loans
Listed below are some of the features of this scheme,
1. The availed money can thus be used to cater to the working capital requirements of the company.
2. Moreover, it is directed towards industries that subsequently deal in manufacturing, services, and trade.
3. Existing as well as new companies can thus avail of these loans.
4. Based on the agreements, the loans can be of 3 to 5-year tenors.
5. MUDRA website and app are thus user-friendly for applying directly.
6. The secured loan money can consequently be thus used to buy equipment and machinery, expanding the business, restructuring it, or hiring competent staff, etc.
7. Collateral-free loan and consequently no third-party security is needed.
8. Furthermore, 3 products subsequently come under this scheme.
Benefits of MUDRA products
Also, there are multiple benefits of the MUDRA scheme, some of which are,
1. Collateral-Free: Firstly, there is no need for any third-party security or collateral to thus avail of any MUDRA scheme.
2. Affordable Rates: The interest rates in this scheme are subsequently cheaper. Moreover, they don't exceed 1% on a monthly basis.
3. Easy Withdrawal: It is consequently easy to withdraw the allotted money under this scheme through the MUDRA card. No physical visit needed.
4. Flexible Usage: Availed loans can also be thus used as term loans and OD.
What are MUDRA loan products?
|Point of Difference||Shishu||Kishor||Tarun|
|For whom||Micro and Small business owners.||Business owners with an established business and thus looking to expand.||Small business owners looking to expand.|
|Limit||Up to Rs. 50,000||Rs. 50,000 to Rs 5 lakhs||Up to Rs. 10 lakhs|
|Required documents||Firstly, quotation of all purchases inclusive of machinery.|
Secondly, purchase details.
Lastly, machinery supplier details.
|Firstly, last 6 months bank account statements.|
Secondly, last 2 years balance sheet.
Thirdly, Memorandum of Association(if applicable)
Fourthly, Articles of Association(if applicable)
Fifthly, the balance sheet of 1 year or the entire loan tenor.
Sixthly, details of all successful sales in the current financial year, before securing the loan.
Seventhly, returns of Income-tax/ Sales-tax.
Lastly, a report showing the Technical & Economical sustainability of the business.
|Firstly, Last 2 years' balance sheet.|
Secondly, a report showing the Technical & Economical sustainability of the business.
Thirdly, MOA(if applicable)
Fourthly, AOA(if applicable)
Fifthly, Last 6 months bank account statements.
Sixthly, a balance sheet of 1 year or the entire loan tenor.
Seventhly, details of all successful sales in the current financial year, before securing the loan.
Eighthly, returns of Income-tax/ Sales-tax.
Ninthly, ID proof.
Lastly, SC/ST, OBC certificates(if applicable).
MSME's thus situated in both rural and urban centers can subsequently apply for this loan if they meet the criteria as below,
|Age Limit||18 to 65 years|
|Loan amount||Shishu: up to Rs 50,000 |
Kishor: Rs 50,000 to Rs 1 lakh
Tarun: up to Rs 10 lakhs
|Industry type||Individuals thus employed in agriculture, fruit and vegetable vendors, artisans, small-scale manufacturer, shop owners.|
|Company status||Shishu: launch of a new company|
Kishor and Tarun: Expanding an existing business
|Tenure||3 to 5 years|
Documents Required to Apply for Mudra Loan
Documents subsequently vary with the choice of products. Nonetheless, here is a generic list of commonly asked documents,
1. Identity proof like Aadhaar Card, PAN Card, Voter's ID, Driving License, etc.
2. Proof of Address like Aadhaar Card, valid Passport, Utility bills, etc.
3. Passport size photos of applicant.
4. Address of Proof of the business(if applicable).
5. Quotation copy of equipment/merchandise to be purchased.
Therefore, based on the type of business, along with the mentioned documents specific to the schemes like Shishu, Kishor and Tarun. Moreover, the documents often vary from bank to bank, so get it clarified.
Application Procedure for MUDRA loan
Most Banks offer the MUDRA facility which can be thus easily availed from the below steps,
1. Firstly, go to the official website of MUDRA and subsequently download the application form.
2. Secondly, carefully fill this form with all the correct details.
3. Thirdly, the relevant documents along with the application form thus need to be subsequently submitted.
4. Fourthly, additional details subsequently need to be filled up as mandated by the banks.
5. Fifthly, the bank will consequently verify your details.
6. Lastly, the loan account will then be subsequently credited to the beneficiary's account.
It is often seen that small businesses and startups consequently struggle for the lack of funding. PMMY is a novel scheme launched by the Government of India in 2015 to help such small businesses.
Moreover, it has three basic products namely Shishu, Kishor, and Tarun. Also, each of them has different requirements.
Also, recently, data was released by the government, which revealed that PMMY disbursed nearly 94% of the allotted loans. It has consequently been a promising initiative that aims to promote small businesses and entrepreneurs to expand their businesses.
Furthermore, it is a scheme that thus helps the overlooked sectors to pick up and flourish.
The rates for availing of loans under this scheme are subsequently cheaper. All in all, this scheme provides the necessary support for ambitious business owners to achieve their potential. Dreams have finally found their wings to fly. Seize the opportunity!