Business Loan

Pradhan Mantri Mudra Yojana Empowering Small Businesses

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

In India, unemployment is one of the biggest challenges for the Government. To counter this, the Government is playing a constructive role and has started various schemes, and one of such is the Pradhan Mantri Mudra Yojana. The beneficiaries of this scheme are entrepreneurs, non-corporate guys, non-farmers and the youth, who aspire to be a successful self employed person. Under this scheme, the borrower can avail a loan up to Rs 10 lakh from private & public sector banks, NBFCs, microfinance institutes, and foreign banks.

Definition of Mudra

Mudra stands for "Micro-Units Development and Refinance Agency". It is a Government initiative to support the new age entrepreneurs, who are willing to start up a business or extend their business in the non-farming sectors such as small manufacturing plant, food service, and significantly much more. The prime aim of this scheme is to enable budding entepreneurs to avail the large facilities of the financial institutions more effectively. 

Who can take the benefits of the Mudra Scheme?

The people who are involved in the Non-Corporate Small Business Sectors can get the benefits of the Mudra Scheme. They are artisans, street vendors, small businessmen and shop owners. Through this scheme, they can also generate employment, which can lead to the rise of the GDP of the country.

However, the door is also open for the small scale entrepreneurs, who run private companies, small firms, and others. They should not be a defaulter of any bank. 

Types of Mudra Loan

Shishu: If your loan requirement is less, and you just need only a few bucks, then you can avail this type of loan. Under the same, you can avail the loan up to Rs 50,000. The interest rate is around 12% p.a. 

Kishor: If you need to start up a new business, or want to expand it with a small budget, go for Kishor. The loan amount ranges from Rs 50,001 to Rs 5 lakh. Here, the interest rate depends upon the loan amount and your repayment capability.

Tarun: If you need inventory or business capital to run the business smoothly, then you can avail this loan. Under this loan, you can get the loan of Rs 5 Lakh to Rs 10 lakh. The interest rate varies, and depends upon the loan amount and your creditworthiness.

Where the loan amount can be utilized?

The loan amount can be used to take the business to the next level. The sectors can be a manufacturing or trading one. A borrower can also 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?

The borrower can repay the loan amount in 5 years. (T & C Apply)

Benefits of Mudra Yojana

Micro Financial Institutes active participation

Micro Financial Institutes have the authority to offer the loan up to Rs 1 lakh to the borrowers, who are engaged in small businesses either run by solely or in a joint venture. This feature enhances the role of the MFI and enables the new entrepreneurs 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 at a competitive interest rate. 

Refinance

The Mudra Scheme enables the bank to refinance the loan of the borrower of up to Rs 10 lakh. The banks include Cooperative Banks and Regional Rural Banks. The lenders offer the refinance services, when the loan amount of the borrower extends the limit of the Micro-finance Institutes.  

Overdraft Facility via Card

Under this scheme, the Government of India issues a Mudra Card to the borrowers.The card has an overdraft facility, and can be accessed in any ATM just like a debit/credit card. Hence, this card smoothens the flow of currency and allowed the borrowers to utilize the loan amount smoothly.

Inventory

Machineries and Inventories are required for the successful operations of the business. Under this scheme, funds are allocated for the said purpose. 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 equipments, and can boost your small business more efficiently. Hence, this scheme encourages the new age entrepreneurship and enables one to take his/her business at another level.

No Processing Fee

The borrowers don’t have to pay the processing fee or any collateral against the Mudra Loan. Even, those who do not have any assets for the collateral can now easily avail the loan through the Mudra Scheme.

Who are all eligible for the Mudra Loan?

  • A person who is engaged in the micro and small enterprises
  • One who needs to generate the income for the livelihood, and aspires to have a better standard of living
  • A person who is engaged in the allied agricultural sectors

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 a 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.’
  • Afterthat, 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 the ‘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
  • 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. Now the bank will go for the verification process of your document. Once it is cleared, they will approve and disburse the loan. Then you can utilize the same as per your business needs. Thanks to the Indian Government constructive initiatives.