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MUDRA LOAN & MUDRA LOAN ELIGIBILITY

mudra loan & mudra loan eligibility.

MUDRA LOAN stands for Micro Units Development and Refinance Agency Limited and is a loan given to establish and develop small businesses and micro enterprises across India. MUDRA LOAN is available under Pradhan Mantri Mudra Yojana (PMMY). The loan was launched from 8 April 2015 to provide financial assistance to non-farm micro enterprises and small non-corporate businesses.

Loans are provided by NBFCs, commercial banks, small finance banks and RRBs, and loans up to Rs 10 lakh can be availed depending on the scheme. The primary role of MUDRA loans is to provide sustainable business development and finance to rural or small scale entrepreneurs.

During the financial year of 2020-21, the total number of MUDRA loans sanctioned across the country is 24530897. Within this year, the total loan amount authorized was Rs 147478.66 crore.

Eligibility Criteria for Loan Application:-

1. All Indian citizens over the age of 18, who are the owners of an upcoming small manufacturing, trading, or service sector business, are eligible to apply for the loan.

2. It can be implemented by individuals, traders, manufacturers, MSMEs, business owners, shopkeepers, start-up micro enterprises and small scale investors.

3. The following categories of businesses can apply for Mudra loan:-

.Food Products and Vendor Services

.handicraft textile industry

.land transport

.food product maker or baker

.Community services such as gyms, salons, printing shops, repair shops

.Agricultural activities like dairy, poultry, fisheries etc.

Who can apply for Mudra loan?

Under the aegis of MUDRA loan, most of the micro enterprises and small businesses get a chance to flourish and grow. It is mostly provided for income generating enterprises and is applicable to diverse domains.

It provides loans primarily to business entities involved in trading, manufacturing and secondary allied businesses. Loans are provided to individuals, micro-firms or small private companies. 

It also extends to vegetable or fruit vendors, shopkeepers, repair or servicing shops, machine operators, artisans, food processors, food service businesses, etc. This is applicable for small companies in both rural and urban areas.

Understanding the Types of Mudra Loans:-

There are three categories of Mudra loan under PMMY scheme. Each category has a different financial limit and helps meet the financial needs of a small business.

1. Shishu Mudra Loan.

Shishu loans up to Rs 50,000 are sanctioned under this category. This loan is for those who are starting a business or have a business plan. This loan covers the basic cost of setting up the unit, purchasing machine or equipment and resources required to set up the business. It requires primary loan documents and cost for loan application.

2. Kishore Mudra Loan.

Loans are sanctioned under this category within the range of Rs 50,000 to Rs 5 lakh. This loan is for those people who have an established business and need financial assistance for the expansion and growth of their business. Since it is for an existing income-generating business, the loan application requires bank details, income statement, projected expenses, balance sheet and business proposal for value or expansion.

3. Tarun Mudra Loan.

Under this category, the loan is sanctioned within the range of Rs 5 lakh to Rs 10 lakh. This loan is for enterprises or businesses that want to expand and diversify their business domain. It requires all the required documents under the juvenile loan category.

Funds or loans can be availed under two schemes, which are:-

.Micro Credit Schemes (MCS) – These are for micro enterprises or small businesses, and loans are provided through MFIs. The sanctioned amount is up to one lakh rupees.

.Refinance Scheme – NBFCs, commercial banks and RRBs offer loans up to Rs.10 lakh. These are provided either in the form of term loans or working capital to run and grow the business.

How do businesses benefit from Mudra Loan?

The objective of the Mudra loan scheme offers is to help in the development and expansion or establishment of MSME industries and to support small entrepreneurs. Here are some of the benefits of getting a Mudra loan approved:-

It does not have any processing fee for the approval of the loan. It does not require collateral or security deposit to apply for the loan.

There are various ways of providing loans. It can be extended in the form of term loan, working capital, MUDRA card or letter of credit. The loan terms are convenient.

The loan tenure is for 5 years. The borrower can repay the loan in flexible EMIs within 5 years. The loan interest rates set by the lender are reasonably very low-interest rate.

The processing time for the loan is short and it takes only 7 to 10 days.

The loan interest rate are lower for women entrepreneurs or borrowers under the special category.

The government of India guarantees the loan to the borrower. Therefore, it does not matter what the credit score rating is for the borrower.

It helps in providing financial assistance to the establishment or expansion of new small businesses even without proper basic banking facilities. Mudra loan application process. Applying for a Mudra loan is not complicated; One can do it both online and offline.

Mudra loan online application:-

The first step is to find the right lender, which includes commercial banks, NBFCs, RRBs etc. Visit the official website of the lender financial institution and download the form. 

The form is different for the three categories of Mudra loans.

Fill all the detailed information related to personal and business in the online form. Make sure that all the information provided is correct.

Apply with all the documents required by the financial institution to check and process the loan.

The application form and attached documents are examined carefully, verified, and if the loan is approved successfully, it will be processed for the disbursement amount. 

A Mudra card is issued with a pre-loaded sanctioned loan amount. It can also be used as a credit card.

Mudra loan offline application:-

The offline process is convenient for those who are not well versed with the online application system. This process requires a personal visit to the bank or the lending financial institution.

It is necessary to personally visit the lending financial institution for the offline process for the loan application. Mudra loan form can be availed from the lending bank or can be downloaded online and printed.

A self-written plan for business and required documents, along with a duly filled application form and a passport size photograph, must be submitted.

All documents, business plan and application are verified. Once the loan is confirmed, the amount is preloaded in a Mudra card and provided to the applicant.

Documents required for loan application:-

Documents may vary from business to business. For a new business, a business plan and estimated purchase costs are required. Here is the complete list of documents required for loan application:

Official business documents are required to obtain a loan for an existing business. These include licenses, registration forms, certifications and relevant documents supporting the business.

If the loan is for starting a new business, business plan documents need to be submitted. It should include information about suppliers, vendors, resources, pieces of machinery, utilities, etc., required to set up the business. 

Required estimated cost for the upcoming year or upcoming plans or a document showing the value of the business plan.

Document showing proof of identity and address for the business. This includes Driving License/Passport/Aadhar Card/Bank Statement/Voter ID Card.

Duly filled application form for loan with passport size photograph.

Certificate of belonging to special category like ST, SC, Minority, OBC, Disabled, Senior Citizen etc.

For Kishor and Tarun loans, it is necessary to show documents like bank statement, financial or income statement of the previous year and balance sheet of the previous year and expenditure estimate for the coming year.

Documents related to proof of identity and proof of address need to be self-attested. For refinance or term loan for expansion of business, ensure all documents related to purchase of equipment and money spent on various resources.

Conclusion:-

Mudra loans have helped boost the “Make in India” campaign by supporting small and micro-firm and businesses. It has also helped break down the bottlenecks faced by Micro, Small and Medium Enterprises (MSMEs) in financial assistance. Bond-free and low rate of interest loans have helped the growth of micro businesses tenfold in the last few years.

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