On April 8, 2015, our honourable Prime Minister launched the Pradhan Mantri Mudra Yojana (PMMY) with a mission to provide financial security and economic success for small businesses. If you are an MSME owner and often find it challenging to gather funds, you can benefit immensely from this scheme. Keep reading about Mudra loan, its eligibility criteria, features, and more.
What is Mudra Loan?
Micro Units Development and Refinance Agency, often abbreviated as MUDRA, was mainly established to financially support emerging MSMEs (micro, small, and medium enterprises). For the financial year 2022-2023, it had sanctioned about 1.40 crore loans.
Applicants can opt for a loan amount up to Rs. 10 Lakhs to fund their business expenses and plan their business expansion. There are three products of Pradhan Mantri Mudra Yojana, namely, Shishu loan, Tarun loan, and Kishore loan.
Features and Benefits of Mudra Loan
The features and benefits of applying for a Mudra loan are as follows:
- You do not have to collateralize your property, jewellery, or any other asset for a Mudra loan. Hence, you can escape the additional burden of arranging for property papers and other documents. Also, you will not have to fear losing your property or jewellery in case of default.
- You can withdraw the loan amount as and when required from your bank account using a Mudra card. These enable judicious use of the loan amount while meeting urgent fund requirements.
- The interest rate for Mudra loans is easily affordable for everyone. Hence, you need not worry or compromise your lifestyle much to pay the monthly instalments.
- You can flexibly opt for loan repayment tenure between 3 to 5 years at your convenience.
- You can apply for a loan of up to Rs. 10 Lakhs under the Tarun loan scheme. If you opt for a Kishore loan, the amount must range between Rs. 50,000 and Rs. 5 Lakhs. For a Shishu loan, you can opt for a loan amount of up to Rs. 50,000.
- Both existing and new MSMEs can apply for Mudra loans to fund their businesses. This money acts as working capital for a business.
Additionally, the eligibility criteria to obtain a Mudra loan are quite simple and easily achievable.
Below are the eligibility criteria an applicant must meet to qualify for a Mudra loan.
- Age of the applicant must be between 18 and 65 years.
- The applicant must be an artisan, a shopkeeper, a fruit and vegetable dealer, a small manufacturer, or occupied in agriculture such as poultry, fisheries, or livestock units.
- The applicant must own a new or existing MSME unit.
Once you fulfil the required eligibility criteria, you can easily apply for a Mudra Loan in just a few easy steps.
Steps to Apply for Mudra Loan
You must follow the steps mentioned below to apply for a Mudra loan online:
Step 1: Navigate to the official website of a financial institution registered with PMMY.
Step 2: Download and fill in the relevant application form that serves your purpose.
Step 3: Once done, review and submit the application form.
Step 4: Upload the required documents and submit your Mudra loan application.
However, you can also opt for an offline application for a Mudra loan. For this, you will have to visit the financial institution’s physical branch and fill out the application form. Then submit two passport-sized photographs and the required documents to complete the Mudra loan application.
Documents Required for Mudra Loan
The essential documents that you need to submit are as follows:
- Identity proof documents include Aadhaar card, voter ID card, PAN card, or driving license.
- Address proof documents such as electricity bills and water bills.
- Business existence proof such as business address certificate, business registration certificate, partnership deed, rental agreement, articles of association, memorandum, lease deeds, or title deed.
- Caste certificate copy if the applicant belongs to a reserved caste.
- Income proof such as Income Tax Returns, upcoming two years’ projected balance sheet, bank account statement of last six months, and previous three years’ Audited Balance Sheets.
Interest Rates and Charges of Mudra loan
The Mudra loan interest rate and charges are as follows:
- The interest rate varies with the financial institution where you apply for the loan.
- For Shishu loan and Kishore loan, there is no processing fee. However, you will have to pay about 0.5% processing fees for a Tarun loan.
You can quickly compare the Mudra loan interest rate offered by different financial institutions by visiting the official website of Bajaj MARKETS. This would save your time immensely as you will not have to visit the official websites of financial institutions looking for the same. Additionally, you can compare the interest rates at a glance and choose the one offering the lowest, so save more on EMIs.
Now that you have a complete idea about Pradhan Mantri Mudra Yojana, you can apply for the same to gain maximum benefits from this scheme. First, however, you must check the eligibility criteria and review your application form after filling it out to avoid loan application rejection.