All You Need to Know About Mudra Loans
Heading your own company or project may require you to be the Superman of the Start-up where you don many hats. This means that work will be really hard while you put in the extra hours as also dabble in a lot of roles. All this may channelize your energies in the right direction but chances are that you would miss out on a few important aspects regardless. Recently, our establishment has started taking interest in business and the spirit of entrepreneurship. Mudra loan scheme is one such initiative as part of the larger plan to empower and encourage businessmen in their endeavours. A Mudra loan is a well-devised financial tool by the Government which can benefit many people.
Mudra Loan Eligibility
Are you a working professional with great ideas, all set to take the competitive market by a storm? Or you could be a seasoned expert with decades of work experience inching closer to the long-cherished goal of starting up. Mudra loans can come to your rescue! We are here to give you a low-down on all sorts of financial assistance provided by the current Government in the form of Mudra loans. The Pradhan Mantri Mudra Yojana lets applicants realize their dream with start-up business loans. Mudra loan scheme was first announced in the Union Budget 2016 by Honourable Finance Minister Arun Jaitley. Initially started with a budget of Rs.20,000 crores, Mudra loans are designed to empower individuals to transform their business story. Kick-starting your venture with the scheme need not be a dream anymore if you take the right approach. Though loans provided do not exceed the 1 million INR mark, note that this financial credit is granted collateral-free to all applicants.
Types of Mudra Loans
According to the stage of his/her company’s progress and requirement, applicants can apply for different slabs of loan. Mudra loans can be categorized into Shishu (Small loan- less than Rs.50,000), Kishor (Medium loan- Rs.50,000 to 5,00,000) and Tarun (Big loan- Rs.5,00,000 to 10,00,000). Acquiring a general loan can be a cumbersome task but it’s relatively easier acquiring a mudra loan for your startup.
Prime Minister Narendra Modi flagged off this institution– Micro Units Development & Refinance Agency Ltd. (MUDRA)– in 2015 specifically, facilitating loan amounts to anyone with a sincere ambition but in need of funds. Mudra loans have already facilitated finances for many individual business owners who were looking to accelerate their business as well as those facing a setback or crisis in personal life. Business in India is largely ruled by the unorganized sector. Mudra loan scheme has already touched lives of thousands of small-scale businessmen who are independently running their show.
Mudra loan eligibility criteria
All said and done, the most important question that remains-
Will you get a loan from the Pradhan Mantri Mudra Yojana (PMMY)?
Here’s a look at the Mudra loan eligibility criteria for applicants, so you can be sure:
1) Only citizens of Indian origin may apply for the mudra loan scheme.
2) The applying company cannot be more than 7 years old or with a turnover of more than Rs.25 crores. In these cases, company doesn’t qualify for the term ‘start-up’. However, you can get a mudra loan on an individual or personal level.
3) Banks run their checks thoroughly on the applicants and hence, it is advisable to present a solid plan of scaling up and repayment.
4) Applicants must comply with the lending bank’s terms & conditions pertaining to mudra loan.
5) Except for farm income generating individuals or cooperatives, businesses from across sectors can apply.
Mudra loan provides a positive push to creating employment in the long run. The mission to empower individuals under the scheme has a multiplying effect on the community and immediate circle of the beneficiary as well.
How do I apply for a Mudra Loan?
Let’s look at the process of applying for a loan from MUDRA Yojana closely. A mudra loan for starting up a business under MUDRA Yojana goes through a straight-forward process as listed below:
Step out:
A number of banking institutions have been shortlisted by the Government to provide mudra loan for starting up and other purposes like business vehicle loan. Visit the nearest bank, non-banking financial company (NBFC) or micro-financing institutions for more details on terms and conditions of mudra loan and its eligibility
Apply:
Bank will hand you an application form upon enquiry about mudra loan. Fill the mudra loan form after going through it carefully and confirm the documents needed for submission.
Documentation:
Promptly provide documents for Identity Proof, Residence Proof, Passport-size photographs, Business Address Proof and Proof of Category of the business. It is best to present a business plan along with timeline to maximize your chances of mudra loan approval.
Get Card:
Once your mudra loan is approved, you will receive a MUDRA card which works like a credit card. That is when you know that you are all set for business expansion. These loans serve as start-up business loans provided to applicants free of any collateral so that they are empowered to grow without any bumps. Till now, several individuals across all states of India have been able to get financial assistance from MUDRA. Sanctioned loans have raised standard of living for applicants in many cases and for some, it has warded off a difficult financial crisis in business and personal life.
FAQs:
1) Why do need a Mudra Loan?
Mudra loan is a collateral-free loan with nominal interest rates. Business loans are not easy to avail, especially for people dealing in the unorganized sector and for those with little experience or business background. Since these loans are part of a mission-oriented initiative of the Government, it is suitable for all business owners to avail the mudra loan to their best advantage by filling the mudra loan application form.
2) Which are the banks that offer Mudra Loans?
A good mix of public sector banks, private banks and other financial institutions have been authorised for Mudra loans. The numbers are as follows as of today- over 98 financial institutions. Out of these, 27 Public Sector Banks, 27 Regional Rural Banks, 17 Private Sector Banks, 2 Foreign Banks, and 25 Micro Finance Institutions (MFI) are authorized provide Mudra loans to business owners. You can visit bank branches to understand mudra loan eligibility further.
3) Which Mudra loan is suited for starting my business?
Out of the three available categories of Mudra loan, the Shishu loan is the most suitable one for start-ups. Carry your relevant documents to fulfil the mudra loan eligibility and apply for the loan. Having a business plan to present will be professional and the authorities expect such sincerity from applicants.
4) What documents are needed for Mudra loan approval?
Visiting the nearest bank branch you will need to furnish the following documents along with the application form.
- Identity proof
- Residence Proof
- Proof of belonging to a special category such as SC, ST, OBC, Minority, etc.
- Proof of Identity, Address, Licences of the Company (if any)
- Business plan or Item list with quotation to be purchased with loan amount (if any)
- 2 passport photographs (recent)
5) What is a Mudra Card? Is it necessary?
Mudra card acts like a credit card which gets granted to you upon loan approval. Though the credit limit may be set at 10%, there are banks that have started allowing cash withdrawal from Mudra loan cards at ATMs.
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