India is home to a large number of small and medium enterprises. The emerging market, the introduction of technology and skilled manpower are some of the driving factors that have made India favorable for startups.
The evolution of Indian startup ecosystem over the last decade has played a crucial role in the growing economy of our country. In addition to that, small and medium businesses have also contributed to the increasing employment opportunities across the country.
Keeping all the factors in mind, the Indian Government has taken proactive measures to ensure the growth and development of small and medium businesses.
One such initiative taken by the Government is the Pradhan Mantri Mudra Loan (PMMY). MUDRA stand for Micro-Units Development and Refinance Agency (MUDRA).
It is a Government established organization that provides financial aid to small business.
Structure of MUDRA loan
The Structure of MUDRA loan scheme is mentioned below
- Sishu Loans – Rs. 50,000
- Kishor Loans- Rs. 5,00,000
- Tarun Loans – Rs. 10,00,000
How to apply for PMMY?
You can avail MUDRA loans with the help of banks and NBFCs registered under the Pradhan Mantri Mudra Yojana (PMMY). Public and private sector banks, NBFCs, small banks, rural banks, scheduled banks, and co-operative societies provide MUDRA loans.
The best part is that lenders do not charge any processing fees or application fees while approving and disbursing the MUDRA loan. So if you are an entrepreneur, looking to expand your business, you can consider availing MUDRA loan under the Pradhan Mantri Mudra Yojana (PMMY).
The steps to apply for a loan under PMYY scheme are mentioned below:
- Before you start with the application of MUDRA loan, make sure that you have all the documents readily available with you. The basic documents required for MUDRA loan are Identity proof, address proof, and business proof.
- After gathering all the mandatory documents, you must approach the financial institution through which you wish to avail the MUDRA loan. Fill the Pradhan Mantri Mudra Yojana application form.
- Make sure that you enter all your personal and business details accurately in the application form
- Specify the loan amount you wish to avail under the Pradhan Mantri Mudra Yojana
- Once you are done with the above-mentioned process, the financial institution will review your application and verify your documents.
- If everything is found to be satisfactory, your loan application will be approved and the amount and will be reflected in your bank account within a short duration.
Eligibility for loan under the Pradhan Mantri Mudra Yojana (PMMY)
It is advisable that you check your MUDRA loan eligibility before applying for a MUDRA loan. This will help you avoid any inconvenience in the later stages. The MUDRA loan eligibility is mentioned below
- All startups can benefit from the Pradhan Mantri Mudra Yojana. Traders, manufacturers, service providers, artisans, self-help groups, individuals working at lower levels are eligible beneficiaries of the Pradhan Mantri Mudra Yojana.
- Also, to be eligible for loan under the Pradhan Mantri Mudra Yojana, the applicants should not have defaulted repayment of earlier loans taken from any lending institution.
You can easily apply for a MUDRA loan online with the help of leading banks and NBFCs. MUDRA loan can help you get the required finance for the expansion of your small business.
Now that you have a fair understanding of various aspects of loan, ensure that you make the most of it to avail the required funds and take your business to greater heights.
Make sure that you are well aware of the purpose behind availing the loan amount. This will help you utilize the loan amount wisely. Some of the primary reasons, wherein availing a MUDRA loan can prove to be extremely beneficial are mentioned below:
- Meeting working capital requirements
- Capacity expansion
- Modernization and upgrading technology
- Purchasing machinery
- Renovation of business premises
If you are a newbie in business, it would be advisable to learn about the market and research your customer base before taking the MUDRA loan. You should also research the financial institution carefully before availing the loan.
This will make the loan application process smooth and hassle-free. Another major advantage of Pradhan Mantri Mudra Yojana is that you can avail the loan amount despite your poor credit history.
This is helpful for small businesses that are struggling to maintain a positive cash flow. The repayment tenure of loan ranges from 3 years to 5 years and you can opt for a tenure depending upon your repayment capacity. Knowing all these aspects of MUDRA loan will help you make a well-informed decision that is best suitable for your business.
