Business Loan

Pradhan Mantri Mudra Yojana- Next Level to Small Business Loan

10 Jul 2019 4 min read
Business Loan: Pradhan Mantri Mudra Yojana- Next Level to Small Business Loan

In India unemployment is the biggest challenge for the Government and to improve the figure, the Government has started various schemes and one of such is the Pradhan Mantri Mudra Yojana. The beneficiaries of this scheme are entrepreneur, non-corporate, non-farmer and the youth who wanted to go for the startup. Under this scheme, the borrower can avail the loan up to Rs10 lakh from private banks, public sector banks, NBFC, microfinance institute, and Foreign Banks.

Definition of Mudra

Mudra stands for Micro-Units Development and Refinance Agency is a Government initiative to support the new entrepreneurs who are willing to start up a business in the non-farming sector such as small manufacturing plant, food service and significantly more. The prime aim of this scheme is to enable people to avail the enormous facilities of the financial institution in an effective way.

Who can take the benefit of Mudra Scheme?

The people who are involved in the Non-Corporate Small Business Sector can get the benefit of Mudra Scheme and they are artisans, street vendors, small business owner, and shop owner. Through this scheme, they can also generate employment which can lead to the rise of GDP.

However, the door is also open for the business owner who runs the private company, small firm, and others. But with one condition, i.e. they should not be a defaulter.

Types of Mudra Loan

Shishu: if your loan requirement is less and need only a few bucks, then you can avail this type of loan and under the same, you can avail the loan up to Rs50,000. The interest rate against this loan is 12%.

Kishor: If you need to start up a new business or want to expand your business within a budget of Rs5 lakh, then you can go for this loan as the loan amount ranges from Rs50,001 to Rs5 lakh. In this type, the interest rate depends upon the loan amount and your repayment capability.

Tarun: If you need to go for the inventory or business capital then you can avail this loan. Under this loan type, you can get the loan of Rs5 Lakh to Rs10lakh. In this type also, the interest rate varies and depends upon the loan amount and your creditworthiness.

Where the loan amount can be utilized?

First and foremost, the loan amount cannot be used to fulfill personal needs. It can be used to enhance the business which covers manufacturing or trading sectors. The enhancement means a borrower can utilize the loan amount in the expansion of the business through marketing or acquiring assets for the business.

What is the repayment tenure of Mudra Yojana?

Under this scheme, the borrower who received the loan can repay the loan amount within 5 years. However, if the loan amount is fewer then the duration of repayment will be lesser and will be decided by the lender.

Benefits of Mudra Yojana

Active participation of Micro Financial Institute

Micro Financial Institute has the authority to offer the loan up to Rs1 lakh to the borrowers who are engaged in a small business either run by solely or in a joint venture. This feature enhances the role of the MFI and enables the new entrepreneur to utilize their skills in the business.

Mahila Uddyami Yojana

Women Empowerment is the prime focus of the Government and for their growth, the Government introduced this scheme under Mudra Yojana. Through this scheme, the women who are willing to start up a new business can avail the business loan and they will also get the relaxation.

Refinance

The Mudra Scheme enables the bank to refinance the loan of the borrower up to Rs10 lakh. The banks include Cooperative banks and Regional Rural banks and they offer the refinance service when the loan amount of the borrower extends the limit of the microfinance institute. 

Overdraft Facility via Card

Under this Scheme, a Mudra Card is issued by the Government to the borrowers so that, they can utilize the loan amount in an efficient manner. The card has an overdraft facility and can be accessed in any ATM just like a debit/credit card. Hence, this card smoothen the flow of currency and allowed the borrowers to utilize the loan amount in a smooth way.

Inventory

Business always requires the equipment and under this scheme, you will get the same feature. If you are looking for a way to purchase the equipment for your business, then Mudra Finance Scheme is an ideal choice for you. Through this loan, you can purchase the new equipment and can boost your small business in a more efficient manner. Hence, this scheme encourages the new entrepreneur and enables them to take their business at another level.

No Processing Fee

The borrowers don’t have to pay the processing fee or any collateral against the Mudra Loan. Thus the borrower who doesn’t have any assets for the collateral can now easily avail the loan through Mudra Scheme.

Who are eligible for Mudra Loan?

  • A person who is engaged in the micro and small enterprises
  • Who needs to generate the income for the livelihood and better standard of living
  • A person who is engaged in the allied agricultural sector

After knowing about the features and benefits of the Mudra Yojana, it’s time to know about the application process. The process is very simple and for your convenience, the detailed steps are listed beneath.

How to apply for Mudra Yojana?

  • Go to the official website of Pradhan Mantri Mudra Yojana by clicking on the link https://www.mudramitra.in/
  • Scroll down the page and click on ‘Continue for PMMY Loan’.
  • Thereafter, you will be directed to a new page and here you will have to enter the username and password. However, if you are a new user then click on ‘New User’ and then fill the basic details to complete the registration process.
  • After signing in you will be asked to choose the loan amount as per your requirement, select the same.
  • Now, fill the application form with complete details and then click on the ‘Next’ button.
  • After filling the form, you will be asked to choose the lender. Select the one as per your requirement and after selecting the same, click on the ‘Submit’ button.

That’s it; your task is done and now the bank will go for the verification process of your document and the application form and once it is cleared, they will approve the loan. Soon, you will receive the loan amount in your bank account and you can utilize the same as per your business needs.