Many people want to start their own business, but are unable to do so due to lack of funds. To help such individuals, the central government has launched the Mudra Loan Scheme. Pradhan Mantri Mudra Yojana (PMMY) provides collateral-free loans up to ₹20 lakhs to non-farm, non-corporate micro/small enterprises.
If you want to start a new business or expand your existing business, then Mudra Loan Yojana can be a great option for you. Most people take out business loans, which have high interest rates. However, Mudra loans provide easy access to financial assistance.
Women are given priority under the Mudra scheme. In this article, we’ll cover information related to Mudra loans, such as how to apply for a Mudra loan, eligibility, and required documents.
What is Mudra Loan
Mudra Loan is a government loan scheme offered by the Government of India under the Pradhan Mantri Mudra Yojana (PMMY) to provide collateral-free loans to small businesses, startups, self-employed individuals, and micro/small enterprises.
Who gets Mudra Loan?
- Entrepreneurs
- Grocery and Retail Businesses
- Technology Startups
- Manufacturing & Service Sector
- Transport Business (Auto, Taxi, E-Rickshaw)
- Education & Healthcare Services
Eligibility to apply for Mudra Loan Scheme
The government has established eligibility criteria for taking advantage of the Mudra Loan Scheme. To take advantage of this scheme, you must meet the following eligibility criteria:
- The applicant must be a citizen of India.
- The applicant must be above 18 years of age.
- The business must have a clear and practical business plan.
- The applicant must not have previously been a bank defaulter.
- The business must not be engaged in illegal activities.
Documents required for Mudra Loan
Different banks require different documents to apply. Bank officials may ask you for these documents.
- Submit a recent passport-sized photo along with the loan application form.
- Applicant’s KYC documents such as passport, voter ID card, driving license, Aadhaar card, PAN card.
- If the applicant belongs to SC/ST/OBC or any other category, relevant documents.
- Business address and vintage proof
- Business Establishment Certificate (for existing businesses)
- Bank statements for the last 12 months
- Any other documents requested by the bank
How many types of Mudra Loan are there?
The government has established three categories of Mudra loans, which can be applied for based on your needs.
Shishu Loan
- Loan amount: Maximum ₹50,000
- For whom: This is for those who want to start a small-scale business.
- Examples: Boutiques, grocery stores, service centers, online startups, etc.
Kishore Loan
- Loan amount: ₹50,000 to ₹5 lakh
- For: Those who already have a business and need capital to expand it.
- Examples: Manufacturing units, service sector, trading businesses, etc.
Tarun Loan
- Loan amount: ₹5 lakh to ₹20 lakh
- Who is eligible: Tarun Loans are offered for large-scale business expansion. Loans range from ₹5 lakh to ₹10 lakh, and after repaying these loans, you become eligible for the Tarun+ Loan. Loans range from ₹10 lakh to ₹20 lakh.
- Example: Medium level industry, franchise business, hotel and restaurant sector etc.
How to Apply for Mudra Loan Online
Mudra loans are offered by government, private, foreign, cooperative, and regional rural banks. You can also apply for a loan by visiting the nearest branch of an NBFC or MFI.
Step 1: Download the loan application form from the bank’s official website.
Step 2: Fill in the loan application form with all the information and attach the documents.
Step 3: Visit the bank’s official website and submit the application form and keep the reference ID.
Step 4: A bank official will contact you and complete all the loan-related formalities, which will require the reference ID.
Step 5: Once your loan application is verified, the loan amount will be transferred to your account.
How to apply for Mudra loan offline?
The government has also introduced an offline process for applying for a Mudra loan. If you prefer to apply offline, follow the steps below.
- First, visit the nearest branch that offers Mudra loans under PMMY.
- Fill out the application form and submit it along with all the required documents at the bank counter.
- Submit the loan application form
- Complete all bank formalities and procedures.
- After all documents are verified, the loan will be approved.
- Once the loan is approved, the loan amount will be credited to your bank account within the stipulated working days.
Micro Units Development and Refinance Agency Limited (MUDRA) is a government scheme that provides collateral-free business loans and working capital loans to citizens who wish to start their own business. Under this loan scheme, the loan repayment period given by selected banks is 5 years.
