What is Mudra loan?

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What is Mudra loan?

Small businesses are the backbone of Indian economy. They account for over 60% of India's GDP and employ more than 80% of the workforce. However, small businesses in India face many struggles. 

They often don't have access to capital, which makes it difficult to grow and expand. They  also struggle with government regulations that are often complex and difficult to navigate.

The Mudra loan is a government-sponsored loan program that was created to help small businesses in India access capital. The program offers loans of up to Rs 10 lakhs (about $15,000) at low-interest rates. 

The loans can be used for a variety of purposes, such as working capital, business expansion, and equipment purchases.

The Mudra loan program has been a great success. Since its launch in 2015, over Rs 18.6 lakh crore (about $27 billion) has been disbursed to small businesses across India. The program has helped millions of small businesses grow and expand, creating jobs and boosting the economy.

What Is Mudra Loan?

Pradhan Mantri Mudra Yojana was launched on 8 April 2015 with the sole purpose of supporting the growth of small-scale businesses in India. The idea was to sponsor small-scale businesses that are not corporations or engaged in agriculture through Mudra loans.

The word "mudra" itself is an acronym for Micro Units Development and Refinance Agency. 

People who are eligible for Mudra loans can take them without any kind of security or collateral. They can borrow up to Rs. 10 lakh and the repayment time can be between 12 months to 5 years with adjustable EMIs. 

Many popular banks, MFIs or NBFCs provide Mudra loans. So, you can apply to any one of them in your locality.

There are three loan programmes under Mudra.

Eligibility

One must satisfy the following criteria to be eligible for the loan:

1. Indian citizen

2. Aged between 18 and 65 years

3. Non-corporate and non-farming small businesses (like textile businesses, vendors, shopkeepers, food production, etc)

The loan amount under the Mudra scheme can be used for a variety of purposes, such as working capital, business expansion, and equipment purchases.

Repayment

The loan must be repaid within a period of 5 years. The interest rate on the loan is currently upwards of 7.50% per annum. There are no prepayment or foreclosure charges.

Loan Schemes Under Mudra

Shishu Yojana

Are you just starting up or in the early stage of business? Need a little boost to your investment to operate and grow it?

No problem. Under Shishu Yojana, you can request loans up to Rs.50,000 for the same. This yojana is to benefit the entrepreneurs of micro and small businesses.

Documents Required

  • ID proof (PAN card/Aadhar card/Voter ID/Driving licence)
  • Address proof (Aadhar card/passport/any other)
  • Information on items planned to purchase
  • Quotations for the same
  • Information on the suppliers of the said items

Kishor Yojana

Already started the business and in the momentum for expansion/growth?

The Kishor category of the Mudra plan is for such businesses where the enterprise is running successfully and the time is ripe for further growth. 

Under this, you can make loan requests from Rs 50,000 to Rs 5,00,000. And this can be used for purchasing raw materials, machinery and equipment and other things needed for business expansion.


Documents Required

  • ID proof (PAN card/Aadhar card/Voter ID/Driving licence)
  • Address proof (Aadhar card/passport/any other)
  • Memorandum of Association (MoA) and Articles of Association (AoA), if any
  • Balance sheet for the last two years
  • Bank statement for the last six months, if any
  • Report showing technical and economical sustainability of the business
  • Income/sales return
  • Estimated balance sheet for a year or the entire loan period
  • Sales made until the application of the loan.

Tarun Yojana

For businesses that are already well-established and are looking for a financial boost to take things to the next level, we have Tarun Yojana.

An entrepreneur can apply for any amount between Rs 5,00,000 to Rs 10,00,000 under this scheme. As long as they meet all the eligibility requirements, the loan will be sanctioned.

Documents Required

  • ID proof (PAN card/Aadhar card/Voter ID/Driving licence)
  • Address proof (Aadhar card/passport/any other)
  • Memorandum of Association (MoA) and Articles of Association (AoA), if any
  • Balance sheet for the last two years
  • Bank statement for the last six months, if any
  • Report showing technical and economical sustainability of the business
  • Income/sales return
  • Estimated balance sheet for a year or the entire loan period
  • Sales made until the application of the loan.

Mudra loans are a great way for small businesses to get the financial boost they need to grow and expand. The loan amount can be used for a variety of purposes, and there are no prepayment or foreclosure charges.

If you are a small business looking to avail Mudra loan, we can help you get it without any hassle or delays. Contact us now. 
 


Author : Nivetha

Date     : 05-Sep-2022


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