To support small and medium scale businesses across the country, the Government of India launched the Pradhan Mantri Mudra Yojana (PMMY). Under this scheme, small businesses can avail MUDRA loans to meet their financial requirements. Mudra loans are sanctioned and disbursed by public and private sector banks, small banks, rural banks, NBFCs, scheduled banks, and co-operative societies that are registered under the PMMY scheme. The types of loan provided under PMMY are mentioned below:
- Shishu Loans – Rs. 50,000
- Kishore Loans- Rs. 5,00,000
- Tarun Loans – Rs. 10,00,000
Let us have a brief look at all these types of loan provided under the Pradhan Mantri Mudra Yojana:
It is ideal for young entrepreneurs who are looking to establish their new venture. Under Shishu loans, entrepreneurs can borrow a loan amount up to Rs. 50,000. It is an unsecured loan and also no processing fee is charged while availing this type of loan. In order to avail this loan, entrepreneurs would have to provide the following details:
- Quotation of machinery and other items that need to be purchased
- Details of plant and machinery to be purchased
- Details of the supplier providing the plant and machinery
Under Kishore loans, entrepreneurs can avail a loan amount ranging from Rs. 50,001 to Rs. 5,00,000. This type of loan is ideal for entrepreneurs who are looking to expand their business and need capital for the same. Similar to that of Shishu loan, no processing fee is charged in case of Kishore loans. Let us have a look at the details and documents required for availing Kishore loans.
- Balance sheet of the business for the previous 2 financial years
- Balance sheet estimation for the next 1 year
- Income tax and sales tax returns
- Bank account statements for the previous 6 months
- Sales made in the current financial year before applying for the Mudra loan
- A report specifying the technical and economic sustainability of the borrower’s business
Borrowers can avail a loan amount ranging from Rs. 5,00,001 to Rs 10,00,000 under Tarun loans. It is to be noted that a processing fee of 0.50% (plus applicable tax) of the loan amount is applicable on this loan. To avail a Tarun loan, borrowers will have to provide the same details as that required for availing a Kishore loan. The additional documents required for availing Tarun loan is mentioned below.
- Address proof
- Identity proof
- Certificate of SC, ST, OBC, if applicable
Now that you have a fair understanding of the various types of loan provided under PMMY, let us have a look at the Mudra loan eligibility:
Mudra loan eligibility
All small and medium scale businesses can benefit from the PMMY scheme and avail the Mudra loan. Traders, manufacturers, service providers, artisans, self-help groups and even individuals working at lower levels are eligible for Mudra loan under the Pradhan Mantri Mudra Yojana.
However, it must be noted that in order to avail financial support under the Mudra Yojana, applicants should not have defaulted on any previous loan taken from any financial institution.
Let us have a look at how to apply for a Mudra loan:
- You can apply for a Mudra loan online by visiting the official website of the lender with which you wish to avail the e-mudra loan
- Fill in the Mudra loan application form by proving your personal and business details
- Provide all the required documents
- Specify the loan amount and tenure you wish to settle for
- On completing the above-mentioned steps, the lender will sanction the loan amount and it will be reflected in your bank account within a short time
Now that you are well aware of the various aspects of the Mudra loan, ensure that you make the most of it to fulfill your business requirements. One of the biggest advantages of Mudra loan is that you can avail it despite having a low credit score. Also, since Mudra loans are unsecured loans, you won’t have to pledge any collateral while availing the loan amount. The repayment tenure of Mudra loan ranges from 3 to 5 years and you can opt for a loan term that best suits your needs.
Make sure that you read the terms and conditions of the Mudra loan agreement carefully before availing it. In case of any query, you must seek the help of a financial advisor. This will help you avoid any inconvenience in the later stage.