Startup in Lockdown? Expansion of business? Now Avail The Government's Mudra Loans In India.
- Yogesh Suthar
- Jul 2, 2020
- 5 min read
What is Mudra Loan?
The MUDRA loan is provided under the Pradhan Mantri MUDRA Yojana (PMMY) to non-farming and non-corporate micro and small enterprises. (For start-ups). These enterprises can avail loans up to Rs.10 Lakh under the MUDRA (Micro Units Development & Refinance Agency Ltd.) scheme.
Types of MUDRA Loan
Shishu Loan
The Shishu loan is the child category of the Mudra loan and is perfectly suited for small start-ups. A micro business owner can apply for a loan of the amount up to Rs. 50,000. The Shishu loan can help business owners get a small capital to get started in the MSME sector. A potential borrower must present his or her business idea along with the Mudra application form to apply for the loan
Checklist • Machinery quotation and other items to be purchased. • Details of the machinery to be purchased.
Kishor Loan
The Kishor loan in the Mudra loan category is best suited for small business owners who have already started a business and need capital to establish it as a larger enterprise. The business owners can apply for a loan amount starting from Rs. 50,000 up to Rs. 5 lakh under this category. The borrowers must fill the Mudra loan application form and also present the relevant documents to showcase the current position of their enterprise to meet the Mudra loan eligibility requirements.
Checklist • Last 6 months of account statements from an existing banker, if any. • Balance sheet for the last 2 years. • Income/sales tax returns. • Estimated balance sheet for 1 year or for the duration of the loan. • Memorandum and articles of association, if any. • Sales made before filing the loan application and in the current FY. Borrowers also have to provide a report containing the economic and technical viability of the business.
Tarun Loan
The Tarun loan is targeted towards small businesses that have been established for some time and need capital for expansion, as well as micro-units that need funds for the purpose of set up. The business owners can apply for a loan of Rs. 5 lakh to Rs. 10 lakh. The borrowers must fill the Mudra loan application form and present documents to showcase the latest position of the enterprise along with ID proofs to match the lending institution’s Mudra loan eligibility criteria.
Checklist • Same as Kishor. In addition to the above, borrows also have to provide: • Certificate of SC, ST, OBC, etc. • Address proof • Identity proof
Where to Apply for MUDRA Loan :
You can also apply for Mudra Loan online on “Udyamimitra” Portal (www.udyamimitra.in) by registering yourself and your application shall be viewed by many lenders for credit support.
Documents Required for KYC compliance
Summary :
Type of Facility: Working Capital and Term Loan
Purpose: Business purpose, capacity expansion, modernization
Target Group: Business Enterprises in Manufacturing, Trading and Services sector including allied agricultural activities.
Quantum of loan: (Min/Max)
Maximum loan amount: Upto Rs 10 lacs
Loans upto Rs.50,000 are categorised as SHISHU
Loans from Rs.50,001 to Rs.500,000 are categorised as KISHORE
Loans from Rs.500,001/- to Rs.10,00,000/- are categorised as TARUN
Margin (%)
Upto Rs. 50,000/- Nil
Rs. 50,001 to Rs. 10 lacs: 10%
Pricing: Competitive Pricing Linked to MCLR
Repayment Period
WC/TL: in 3 - 5 yrs including a moratorium of up to 6 months depending on the activity/ income generation.
Review of WC/TL to be done annually.
Processing Fee
Nil for Shishu and Kishore to MSE Units
For Tarun: 0.50%(plus applicable tax) of Loan amount
The loans under MUDRA scheme can be availed only through banks and lending institutions which include:
Public Sector Banks
Private Sector Banks
State-operated cooperative banks
Rural banks from the regional sector
Institutions offering microfinance
Financial companies other than banks
As per Mudra’s official website, as on 31 March 2020 in the financial year of 2019-20, total number of PMMY loans sanctioned is 62237981.
The amount sanctioned is Rs. 337465.13 Crore and amount disbursed is Rs. 329684.63 Crore.
FAQs
Q. How do I apply for a Mudra Loan?
A. Mudra loan has a simple application procedure even though the exact procedure varies from one bank to another. Since all the banks and financial institutions cannot offer Mudra loans, you must first check if the nearest bank is eligible to offer Mudra loans. Once you find the right bank, you must inquire about their application procedure and Mudra loan eligibility criteria before you fill the Mudra loan application form.
Q. What is the age limit to apply for Mudra loan?
A. The minimum age to apply for a Mudra loan is 18 years at the time of loan application and the maximum age is up to 65 years at the time of loan maturity. However, the Mudra Loan age limit varies from bank to bank and banks have their sole discretion in deciding minimum and maximum age limit.
Q. Do I need to have an account in the same bank to get a Mudra loan?
A. No, it is not mandatory to apply for a Mudra loan from a bank where you hold an account. However, having a bank account in the same bank might improve your chances of getting a Mudra loan approval.
Q. I want to start a business, which Mudra loan should I apply for?
A. The Shishu loan is the best option for start-ups. All you need to do is present your business idea along with the application form and relevant documents to meet the Mudra loan eligibility requirements and apply for the loan.
Q. What are the documents that I need to apply for a Mudra loan?
A. You need to go to the bank of your choice that offers a mudra loan to get the application form. Here are the documents that you need to provide if you apply for a mudra loan and want to meet all Mudra loan eligibility prerequisites.
2 Recent passport size photographs
Proof of Identity of the applicant
Proof of Residence of the applicant
Proof of belonging to a special category such as SC, ST, OBC, Minority, etc.
Proof of Identity, Address, Licences of the Enterprise (if any)
Quotation of items to be purchased for business use (if any)
Q. What is a Mudra Card?
A. Once you have been granted a mudra loan, you will receive a card known as the Mudra Card. The Mudra card, sometimes called the Mudra loan card, is similar to a credit card and has the credit limit set at 10% of the loan amount you have been granted. Some banks have also launched Mudra cards that you can use to withdraw money from ATMs as well. The maximum withdrawal limit for a day is set at Rs. 25,000.
DISCLAIMER :
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Yogesh Suthar is not liable for any decision arising out of the use of this information.Have You Read This?
Comments