A comprehensive Guide for Pradhan Mantri Mudra Yojana – Learn how to apply?
Mudra Loan is a government-initiated credit funding program that provides MSME loans, business loans, working capital loans, and overdraft facilities of up to Rs. 10 lakhs to people who are starting running existing ones, new businesses, working for themselves, and MSMEs. Under this plan, the NBFCs and banks do not require any security or collateral from the borrowers. Up to five years are available for repayment, with negligible to no foreclosure and processing fees.
Mudra Loan is a fund offered under a plan or scheme of the Pradhan Mantri Mudra Yojana. MUDRA term stands for Micro Units Development and Refinance Agency a funding plan under a Pradhan Mantri Mudra Yojana that can be used by businesswomen too at some concession prices. Let just start discussing this loan or funding program in more detail covering its eligibility, documents requirement, advantage, and more.
Major Categories of the Mudra Loan
Here we have mentioned the three major categories of the Mudra Yojana with their funding amount & use:
- Kishor Funding Scheme: Through this funding plan businessmen can take a loan of the amount Rs 50, 000 to Rs 5 Lakhs to either start a new venture or for expanding the existing business.
- Shishu Funding Scheme: Under this funding plan, a borrower can take a loan of the amount of up to Rs 50,000 to start a new venture or to full fill the requirement of their business.
- Tarun Funding Plan: This funding loan can only be availed by the established or already existing MSMEs. They can take a loan of Rs 5 lakhs to Rs 10 lakhs to fulfil their daily venture need such as ordering new business equipment, raw material, paying salaries, goods, etc.
Who are eligible for Mudra Yojana?
Aspirants whose ages lie between 18 years to 65 years can apply for the Mudra Yojana. The aspirants must have a good payment background, and should not have missed any prior loan EMI payments or credit card payments.
The funding loan of Rs 10 lakhs will be given to only those business persons who are already engaged in a manufacturing service, trading, or any other services.
- Persons who are business owners, self-employed, or businesswomen too.
- Small, Large, and medium businesses or start-ups (MSMEs)
- Partnership companies, Sole Proprietorships, (LLPs) Limited Liability Partnerships, and other business entities
- Shopkeepers/small businesses, Traders, Retailers, Small Manufacturing companies, and Artisans
How Can I register for MUDRA Yojana?
You can apply for the MUDRA Yojana in two modes – online and offline.
Offline Method- By going to the Bank’s branch
You can access the application form on the authorised website with a link to www.mudra.org.in. Once you find the form on the website, you can download it and fill in the required information. Different banks may have different application methods. You can go to your nearest branch of the specific bank from where you would like to obtain the bank loan and do the necessary bank formalities.
To do this process of application for MUDRA funding, you can simply go to the official website of the Bank. Upon visiting, you will have to again fill out the form correctly with all the required details and provide the essential documents.
Another way to apply is to directly visit the official website of the MUDRA www.udyamimitra.in and follow the requested steps.
Once all your documents were verified by the lender, they will approve your loan and the loan or funding amount will reflect in your bank in 7 to 10 working days.
Advantages of the MUDRA Yojana
- MSMEs involved in trading, manufacturing, and service sector operations can get loans through the Mudra loan program. These are currently the primary sources of income.
- Numerous uses are possible for the financial facilities provided by the PMMY. You can apply for overdraft facilities, term loans, letters of credit, and bank guarantees using the credit from Mudra funds.
- You can use the MUDRA funding amount to expand your existing business
- Women entrepreneurs can avail of this loan for low-interest rates.
- The micro-entrepreneurs find this funding scheme most beneficial for them to start their start-up.
- The lack of a collateral or security requirement for borrowers is one of the main advantages of this Yojana. Mudra loans don’t have any processing fees either. Additionally, the loans are protected by the Credit Guarantee Scheme.
- Business owners who belong to particular categories such as ST/SC can benefit from the low-interest rates if they apply for this funding scheme.
- Those who apply for a MUDRA fund are given a Mudra Card, a form of debit card they can use to pay for their working capital needs. In addition to Point-of-Sale (PoS), and ATM transactions, aspirants can also do business online.
- You can employ the financial and banking services offered by the PMMY funding plan whether you live in a metropolitan or rural region. People from the most remote locations, where there are no banking facilities, can receive financial assistance.
MUDRA Yojana for women Entrepreneurs
This funding scheme greatly benefits women entrepreneurs who are just starting up a new venture or want to expand their existing business. As a part of PMMY’s MUDRA Yojana NBFC (Non-bank financial institutions) offers collateral-free loans for businesses at lower interest rates. Women can get loans up to Rs 10 lakhs under this funding plan with a repayment period of 5 years.
SBI e Mudra funds are also available to female business owners for amounts up to Rs 1 lakh. As mentioned for businesses and individuals, women are still eligible for Mudra funds. For women business owners, processing and foreclosure fees are payable at 0% to 0% of the approved loan amount.
Who receives a MUDRA CARD?
MUDRA Card is a debit card that is given to MUDRA fund holders so that they can fulfil their everyday business needs. Once your loan is sanctioned by the lender, a MUDRA fund account will be created and you will be given a MUDRA Card as a debit card.
The approved fund amount is then transferred to your MUDRA account. You can now withdraw a small proportion of the fund amount that has been transferred into your MUDRA account.
This card also assists you in making MUDRA Transactions and keeping the history of your credit. You can use this MUDRA card throughout the country to purchase or withdraw money from your account.
What are the industries that can apply for MUDRA Funds?
There are some specific industries eligible for the MUDRA Yojana. Some of them are:
- Business vendors
- Agriculture field
- Food production industry
- Self-employed entrepreneurs
- Small-scale manufacturers
- Service-based companies
- Restoration and repair shops
- Truck owners’
Essential Documents Needed for MUDRA Scheme
While applying for the MUDRA fund plan, a borrower has to submit a few important documents for verification purposes. Some of the most essential documents are listed below:
- Correctly filled application form
- A passport-size pic
- Aadhar Card
- PAN Card
- Voter’s Card
- Driving License
- Proof of belonging to special categories such as ST/SC, Minority, OBC, etc.
- Address proof for business
- Bank statement for the last 6 months
- Vintage proof for business
- Any other essential documents required by the NBFC/Bank
FAQs for PMMY Funding Scheme
Who are the clients that MUDRA Loan aims to serve?
The Small Business Segment, which includes millions of proprietorships & partnership firms operating as service sector units, small manufacturing units, small industries, fruit or vegetable vendors, repair shops, etc. in both rural & urban areas, is the target area for MUDRA funds.
Are women eligible for a separate Mudra loan program?
The MUDRA Fund program is available to almost all eligible non-bank & bank financial institutions (NBFCs). For female owners, the qualifying standards remain the same, however, interest rates will differ from one bank to another and be based on the needs of the aspirant’s business & their profile.
Being a women entrepreneur, I wish to launch my boutique. Will MUDRA assist me?
Yes. A unique refinancing program specifically for women business owners can benefit them. When you obtain a MUDRA fund through a microfinance institution or NBFC, you are eligible for the Mahila Uddyami Scheme, which offers a 0.25% interest rebate.
How long does it take the MUDRA fund to get approved by the lender?
Mudra funds are typically approved by NBFCs and Public/ Private Sector Banks within 7 to 10 working days.
Do I need to provide any security or document in the bank to avail of MUDRA funds under the PMMY scheme?
No, you don’t have to provide any security for the MUDRA fund, but yes you will have to submit some essential documents during the application process.