Launched by the Hon’ble Prime Minister Narendra Modi, Pradhan Mantri Mudra Yojana is a dedicated scheme that helps small businesses to grow by providing them with attractive loan amounts of up to Rs. 10 lakhs. This flagship scheme provides affordable credit to micro and small enterprises so that they can grow their business, which will ultimately boost the country’s overall country.
Did you know?
In India, bootstrap businesses and small-scale companies usually contribute nearly 40% of the overall industrial production in the country.
Considering such facts, the programme offers three core products, namely ‘Shishu’, ‘Kishore’, and ‘Tarun’ to cater to the diverse funding needs of the businesses, depending on their size and nature. Popularly known as “Mudra Loans”, these amounts are offered by banks and financial institutions, including small-scale financial institutions, commercial banks, and government-backed companies.
Ready to learn more about the scheme? Let’s dive into the eligibility criteria, loan types, enrollment process, documents required, and more.
Here are the eligibility criteria for the Pradhan Mantri Mudra Yojana.
Minimum- 18 Years
Maximum- 65 Years
|Security or Collateral
|There is no such security amount required.
|Minimum Loan Amount
|Rs. 50, 000
|Maximum Loan Amount
|Of Up to Rs. 10 Lakhs
Features and Benefits of Pradhan Mantri Mudra Yojana
If you wonder, how this scheme can benefit, let’s find out!
- Credit facilities to Micro & Small Enterprises
The key feature and benefit of enrolling yourself in the PMMY scheme is that it provides loans to small businesses to support their growth and development. No matter whether you just started a bootstrap business or an existing business running for a decade, the scheme will help you out if you are looking to grow your business.
- No Security or Collateral Required
Since the loan is backed by the government, borrowers don’t need to provide any security or collateral to get these loans. Thus, the whole process will be quick and easy for small-scale organisations to get funding without running into mistakes.
- No Processing Charges
Another key benefit is that the scheme doesn’t impose any processing charges on individuals to obtain the loan. This, in turn, helps reduce the burden of additional charges on startups that are already struggling to grow their business.
- For Fund or Non-Fund-Based Requirements
It is no secret that financial requirements can vary. Having said that, the scheme is launched to help businesses provide both fund-based and non-fund-based financial requirements.
- Serves Multiple Purposes
Since your prime reason behind the loan is to grow your business, you can easily utilise the loan wherever you want. Whether you want to purchase a bunch of high-end machinery or put some money into hiring skilled labour or other working capital needs, you can use the amount the way you want.
- Decent Loan Amount
Even though your business is small, the scheme is providing a good enough amount to cater to your organisation’s growth needs. With up to Rs. 10 lakhs of loan amount, you can rest assured that the majority of growth aspects will be easily covered with the scheme.
Types of Loans & Their Limits
The applicable limits and rates under the scheme are as follows:
It is the first yet popular product of the scheme that offers a loan amount of up to Rs. 50,000. Depending on the credit history of the borrower, the bank or any other financial institution from which you’re taking a loan will evaluate the interest rate and the repayment period of the loan. Generally, the period is pre-decided in a way that you can easily repay the amount without any difficulty.
This product of the scheme offers loans from Rs. 50,000 to Rs. 5 Lakhs. This kind of product is usually adopted by businesses that need a little bigger capital to grow their businesses. Some of the things for which the amount can be used are to buy a machine to make tasks easier, a bunch of computers to eliminate redundancy, software tools, and more. Like Shishu, the bank will approve the loan amount and consider the repayment period by considering the credit line of history.
It is a popular yet flagship product of the scheme that offers loan amounts of Rs. 5 lakhs to Rs. 10 Lakhs. These loans are generally availed by companies that stand slightly on the medium scale and have already made a profit in the past. Just like the two above-mentioned products, the bank will first understand your business and then check your credit line history.
Pradhan Mantri Mudra Yojana: How to apply?
If you want to buy the scheme and get the required loan amount, you can approach these establishments, including Commercial Banks, RRBs, Small Finance Banks, MFIs, and NBFCs. Then ask a customer representative to give you the Mudra Yojana Form. Before that, tell your loan requirements so that they can give you the right form as per your needs. After that, fill out the form and attach the relevant documents (mentioned below). Ensure you submit the form along with the documents so that they can process the loan. It will take time.
If you are running out of time, then you can also consider the online steps.
- Visit the Official website of Mudra.org.in. Then close the “Beware” pop-up.
- Scroll down below and you will find boxes, including the name of each product of the scheme. After that, click on one to get the desired loan amount.
- Once you click on a respective product, click on “Download”. After that, the form will be downloaded and then take a printout of it.
- Then, fill out and go to the Commercial Banks, RRBs, Small Finance Banks, MFIs, or NBFCs with the attached documents. Submit your form and the concerned entity will decide the loan tenure and allocation date.
Documents Required to Enrol Yourself in Pradhan Mantri Mudra Yojana
- ID proof (copy of your voter ID card, Driving License, PAN Card, Aadhar Card, & Passport).
- Proof of Residence (Recent Telephone bill, electricity bill, Aadhar Card, or passport of Partners/Directors).
- Proof of SC/ST/OBC/Minority.
- Proof of identity/Address of the Business Enterprise
- Applicants should not be defaulters in any bank or financial institution.
- Statement of accounts (for the last 6 months) from the existing bank account you’re having transactions.
- Last two years ‘s balance sheets of the units along with income tax/sales tax return etc. (Application for all cases from Rs. 2 lakhs and above).
- Projected balance sheets for one year in case of working capital limits and for loan period in case of term loan.
- Sales achieved during the current financial year.
- Project report
- Memorandum and articles of association of the company/Partnership Deed of Partners.
- Photos of the Directors/Partners/Proprietor.
What are the Types of Loans under Mudra Yojana be used for?
Whether you are a small-scale business or a large-scale corporation, the loans under the scheme can be used for a variety of purposes. These may include;
- Transport Vehicle Loans
- Commercial Vehicle Loan
- Loan for Plant & Machinery
- Working Capital Loans
- Business loans for traders & shopkeepers
- Loan for non-farm activities.
Frequently Asked Questions
Yes, if you want to apply for a Mudra loan, you will need to provide your income tax returns (ITRs) for the past two years.
Yes, mudra loans can be applied for by recent college graduates who want to launch their own companies. The scheme can assist you in launching your business, based on the type of business you want to create and the project requirements.
No, the scheme doesn’t offer any subsidies.