Are you looking for financial support to refinance your business? Apply for the Pradhan Mantri Mudra Yojana (PMYY) to secure a MUDRA loan in India and refinance your business.
Micro-Units Development & Refinance Agency is the full form of MUDRA, which is a scheme for providing loans to businesses, both new and old. When the Government of India launched Pradhan Mantri Mudra Yojana, this loan scheme was put under this Yojana. The government aims to help the different enterprises under the Pradhan Mantri Mudra Yojana, such as Micro, Small, & Medium Enterprises.
The firms that do not have funds are the targets of this loan scheme. This scheme provides funds to those who need it. Loans of up to Rs.10,00,000 are given. Non-corporate, non-farm sectors and small enterprises can get a loan of Rs.10,00,000. If someone wants a loan under this scheme, he can contact commercial banks, RRBs, Co-operative banks, NBFCs, etc. The online form can also be filled to get the loan that is available on the official website.
The prerequisite for taking the Mudra loan is the existence of a business plan with the applicant. No loans are given for personal use, like buying a car or house, etc.
How to Apply for MUDRA Loan in India
An applicant can visit any of the 29 banks which are listed under the scheme. There, further process can be done.
- First, visit the branch of the commercial bank or private bank, which is nearest to your place.
- There, talk to the executive and put the business plan you have in front of him/her.
- Next, you must submit the loan application form, which should be already filled and ready with you.
- Some of the other documents required to submit by the applicant for getting the loan include ID proof, Company address proof, address proof, company identity proof, balance sheets, caste certificate, IT returns, sales tax return of past 3 years, and machinery details.
- Then follow the procedure put forth by the bank and complete the necessary formalities and other things asked for by the bank.
- After you complete everything, the documents that you submitted would be verified. After which your loan will get sanctioned if the documents are correct.
Official websites of all the 29 listed banks are open for those who want to apply for the Mudra Loan online. Just visit the site and apply online. These 29 banks that have a listing under the scheme include rural, public, and private sector banks also. If you apply on the websites, then you would get the application form there only. Applying online for the loan would be very easy for all. It wipes out the need to go to the banks and wait in long queues to get the application form. You can easily apply for the loan from your home itself. Some common steps to be followed while applying for the loan online are:
- You must have the loan application form. So, download it first from the website of any listed bank.
- Fill all the details in the form with the utmost care. All the details should be correct.
- Now, you can find a public or private bank to get a loan from it.
- You need to adhere to the formalities and steps by the bank. Complete all the formalities now.
- When everything mentioned above is complete, your loan will get sanctioned.
There are certain types of business components specified by the scheme that can avail of this loan. If you come under this category, then you are lucky enough. These components are:
- Service-sector firms
- Micro industries
- Repairing shops
- Owners of trucks
- Foodservice businesses
- Fruit and vegetable vendors
- Micromanufacturing firms
List of the documents required to avail the loan is given below-
- Identity proof
- Residence proof,
- Passport-sized photographs,
- Machinery & other items quotations,
- Proof of business identity, and
- Business address proof.
Some of the points that should be kept in mind while filling the application form are as follows-
The name of the type of loan would be written on the top of every application form. There are 3 types of loans- Shishu, Tarun, and Kishor. The application form of Tarun and Kishor are the same, but the Shishu application form is a bit different from the rest of the two. Now, look at the points to be considered:
- The data of the bank where you want to take the loan must be absolutely correct and accurate. Any mistake in the name of the bank or the branch name would not be entertained.
- The name of the applicant should be mentioned in clear words and handwriting
- If you are asked for the name of the applicant’s father or mother, then you must fill it
- Mobile number and address need to be filled
- Give details about your nationality and religion you profess in clear terms. Then, also mention the details of your Aadhar card in the application form
- After estimating the amount of expenditure to start the business, you need to fill it in the form exactly.
- Give information about the sales of the company. This includes the past made sales, the sales currently being done, and the sales expected in the future by the company.
- Relevant cast certificates are required for the OBC, SC/ST classes.
- If you have already applied for or taken the loan, then do mention the details of the past loan like loan amount, loan account details & the type of loan that you availed earlier.
- Attaching photographs is a must. 2 passport sized photographs need to be attached along with the form.
Types of MUDRA Loans
Now, you would be wondering what the difference between the three types of loans under this scheme is. So, have a look at the details mentioned of all of them below.
- SHISHU: Under this category, the maximum loan that an applicant can get is Rs.50,000. This category is good for the ones who are just beginning with their business and do not require a lot of funds.
- KISHOR: If you go for the Kishor loan, then you can take a loan of more than Rs.50,000 and less than Rs.5,00,000. This loan may be taken by the people who started their business recently. But, they need some funds to improve some of the areas in it. Such people’s needs can be easily adhered to by a loan of up to Rs.5 lakh. The interest rate varies according to the lending institution. Your business strategy/plan and credit history are the critical factors that are considered while deciding the interest rate for your loan. So, you must ensure that you have the best of both. The bank is also responsible for determining the repayment period of your loan.
- TARUN: This category is the highest loan offering category under the scheme. It grants a loan of Rs.5,00,00-Rs.10,00,000. Such loan is generally taken by and given to those who want to expand further their business which has been already established. Here also, the interest rate is fixed after taking into account the credit history and the scheme of loan. The repayment of loans also depends on these factors.
General Repayment Period
The loan is granted for 5 years, during which the borrower will have to return the loan in small parts, i.e., EMIs. The payment of such EMIs is not a difficult task for most of the people because of the low-interest rates offered by the banks. Hence, it is rightly said that the MUDRA Loan doesn’t put any stress on the people, and they can easily expand their business using the loan funds. The daily finances and routine of the business are also not hampered or disturbed.
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Frequently Asked Questions
#How much time will it take to process the loan if one goes for the SHISHU loan scheme?
It will not take more than 7-10 days to process such a loan.
#Does every bank in India offer MUDRA loans?
Not every bank, but yes, almost all the banks, whether private or public, are offering such loans to the public.
#Is the interest rate of the MUDRA loan fixed? If yes, what is it?
No, the interest rate under this scheme is not fixed. RBI has given some guidelines according to which the interest rate differs for every applicant, depending on his/her loan amount and requirement. The credit history and the business plan also helps in deciding the interest rate.
#Does an applicant need to deposit some sort of security or collateral to avail the loan?
The answer to this question is a big NO. This is a good thing on the part of MUDRA loans that they do not ask for any securities.
#Can the people who are physically-challenged apply for the MUDRA loan?
Yes, every Indian citizen is free and eligible to avail of this loan if he/she has a business plan for which they need to take the loan.
Taking this loan would be very helpful for the businesses already established or for the startups. They would get their required funds, which can be used to invest in the business and improve it. So, you can go through the procedure and types of loans under this at least once. If it attracts you, you can apply for Mudra loan in India and enjoy the benefits of this loan at low-interest rates.