What is MUDRA?
PMMY or Pradhan Mantri MUDRA Yojana is a facility provided by the government of India to help all the micro, small and medium enterprises financially. It was announced in the Financial budget of 2015 and launched on 8th April 2015. MUDRA stands for Micro-Units Development and Refinance Agency Ltd. For such a process you need to know how to apply for mudra loan.
MUDRA is a refinancing agency, that provides financial assistance by lending loans of up to Rs. 10 lakh to non-corporate, non-farm sectors and small or micro-enterprises. The type of institutions that provide these loans are
- Commercial Banks
- Small Finance Banks
- RRB (Regional Rural Bank)
- Co-operative Banks
- MFIs (Micro Finance Institutions)
- NBFCs (Non-Banking Finance Companies)
Must read on the difference between NBFC and Micro Financing Companies
But now the question must have popped up into your mind that what type of business should you be going for to avail this facility. So, before questioning on how to apply for mudra loan, you need to know the eligibility for the same
- Service sector firms
- Micro industries
- Repairing shops
- Owners of trucks
- Foodservice businesses
- Vendors (fruits and vegetables)
- Micromanufacturing firms
Learn more on FSSAI Central license
Types of Loan
There are mainly 3 types of loan provided by the bank to the entity. These are
- Shishu loan- In case the loan is taken up to Rs.50,000. This is for all those who want the least investment. It is for those who wish to start their business and need funding.
- Kishor loan- In case the loan is taken up to Rs.5 lakh apply for this type. If you have already established a business but need some money to improve it. It is the case where the bank decides the time period of loan repayment according to the business type.
- Tarun loan- If your business needs a loan of between Rs.5 lakh to Rs. 10 lakh, then this would imply that your business is already established very well but need some money to expand its territory. The credit history of the applicant and the scheme would play a significant role in deciding the interest rate charged.
The documents required to obtain the MUDRA loan are as follows
- Identity Proof like PAN card
- Residence proof
- Quotations of Machinery and other items.
- Passport size photographs.
- Business identity proof.
- Business address proof.
How to apply for mudra loan?
The application procedure to how to apply for mudra loan is very easy and doesn’t involve any collateral or payment of sorts. As of now, 70 banks are listed to carry out this procedure. This is the offline mode of application.
- First of all, go to the nearest commercial bank or private bank
- Second, pitch your business plan.
- Then, you need to submit your application form for the loan.
- Some additional documents apart from mentioned above that you need to submit are caste certificate, balance sheet, IT returns, sales tax returns of the last 3 years.
- After the completion of all the procedures by the bank and the document verification done henceforth, the bank will issue you a loan.
For online application of how to apply for mudra loan, the following procedure needs to be followed
- First, go to mudra.org.in and select the bank from which you want the loan.
- Then, select the type of loan you want to sanction from the official bank’s website.
- Now, download the loan application form
- The next step is to fill all the necessary details in the form correctly.
- Before the loan is sanctioned, find the bank’s branch near you and submit all the documents.
There will be a name of the type of loan sanctioned at the top of the application form. For Shishu loan, the form is different and for the other 2, it is the same.
Additional tips on how to apply for mudra loan.
Some other tips for the first timers wondering how to apply for mudra loan
- Fill in all the details of your name, residence, ID proof, Aadhar card, name of the bank branch and other essentials correctly. Learn all about Udyog Aadhar
- Attach your caste certificate in case of SC/ST/OBC category.
- Details of every sale made by the company in the past, in present, and in the probable future.
- Remember to mention the expenditure incurred to set up the business.
- In case you have applied for a loan in the past, then mention the details of the loan, the amount credited and the loan account details.
- Give all the necessary documents mentioned at the end of every page.
- Then, give 2 recent passport size photographs.
What is the repayment period of this loan?
After getting the answer to how to apply for mudra loan, there is a query as to when one would be entitled to pay back the loan. Well, the individual can repay the loan in 5 years and this is done in installments. And since the interest rate is significantly low, the applicant can repay the loan in an easy manner. This initiative’s objective is to fund the unfunded and create a difference in the world of people who wish to leave a print in the business world.
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