Mudra Loans

List of Businesses under the Mudra Scheme

The following businesses are covered by the Mudra scheme to perform income-generating activities:

• Mudra finance for Machinery/Equipment can be used to purchase commercial transport vehicles such as tractors, auto-rickshaws, taxis, trollies, tillers, goods transport vehicles, 3-wheelers, e-rickshaws, and so on.

• Starting businesses in the service sector, such as salons, gyms, tailoring shops, medical shops, repair shops, dry cleaning and photocopying shops, and so on.

• Food and textile product sector activities include the production of papad, achaar, ice cream, biscuits, jam, jelly, and sweets, as well as the preservation of agricultural produce at the rural level.

• Setting up shops, service enterprises, trading and business activities, and non-farm income-generating activities are also eligible for MUDRA loan.

• Micro Unit Equipment Financing Program: Maximum loan amount of ₹10 Lakh

• Agri-allied Activities: Activities related to agri-clinics and agribusiness centers, food and agro-processing units, poultry farming, pisciculture, beekeeping, sorting, livestock-rearing, grading, aggregation agro-industries, dairy, fishery, and so on. 

Mudra Loan Product Types

Mudra loan schemes are classified into four types: Shishu, Kishor, Tarun, and Tarun Plus. 

What is the purpose of the Pradhan Mantri Mudra Loan?

Yojana MUDRA loans can be used for a variety of purposes, including job creation and income generation. The following are the primary reasons why Mudra loans are obtained:

• Business loans for shopkeepers, traders, vendors, and other service-related activities 

• Equipment financing for small business units 

• MUDRA cards are used to obtain a working capital loan.

• Loans for transportation vehicles

• Agri-allied non-farm income-generating activities such as poultry farming, beekeeping, pisciculture, and so on are eligible for a Mudra Loan.

• People who use tractors, tillers, or two-wheelers for commercial purposes are eligible for a Mudra Loan.

Activities Covered Under Mudra Loan

The following are the activities that are covered by the Mudra Loan:

• Food products industry

• Transportation vehicles that transport both goods and passengers

• Community, social, and individual service activities

• Shopkeeper and trader business loans 

• Textile industry and activities

• Agriculture-related pursuits

• Micro Units Equipment Financing Scheme

How Do You Apply for a Mudra Loan? 

The application form is available at mudra.org.in, where you can download it and fill in all of the required information. Different banks' application processes may differ slightly. You must go to the nearest branch of the desired bank and submit the duly completed application form, as well as complete the bank formalities.

You can also apply online on the bank's official website by submitting the duly completed application form along with the lender's specified documents. Once the lender is satisfied with the submitted documents, the loan will be approved, and the loan amount will be deposited into your specified bank account within 7-10 working days.

Step 1: Make sure all necessary documents are on hand. The main documents you'll need are proof of identification, proof of address, and proof of business.

Step 2: Go to a lender who is part of the MUDRA scheme and fill out an application form.

Step 3: Submit the required documents.

Eligibility for Mudra Loans

Mudra loan is available to Indian citizens who have their own business plans for the service sector, trading, or manufacturing activities and require amounts of up to ₹10 Lakh. It is available from public and private sector banks, regional rural banks, small finance banks, and microfinance institutions (MFIs).

An applicant for a MUDRA Loan must meet the following criteria:

What is the Mudra Loan Interest Rate?

The interest rate for a Mudra loan is determined by the applicant's profile. MUDRA loans are available from several banks in both the public and private sectors. All lenders follow certain guidelines, and the final rate of interest at which a loan is provided to an applicant is determined by the lender. This is done after thoroughly reviewing the applicant's business requirements. 

Documents Required for Mudra Loan Application

The following documents are required for a MUDRA loan:

The Advantages of Taking a Mudra Loan

The following are the key features and benefits of a Mudra loan:

• Both rural and urban areas have access to banking and financial services

• Micro-small businesses and start-ups can obtain financial assistance

• Small-dollar business loans with low-interest rates are available

• The government assumes the borrower's credit guarantee, so if the borrower is unable to repay the amount borrowed, the government will bear the loss

• Food vendors, shopkeepers, and other small business owners can benefit from this program

• This scheme provides financial assistance in areas where people do not have access to basic banking services

• The scheme's repayment period can last up to seven years

• Women borrowers can get loans at a lower interest rate

• Refinance programs are also available through designated lenders

• The Micro Credit Scheme is available to individuals who want to generate income through micro-enterprise activities

• The Mudra loan scheme works in tandem with the government's "Make in India" campaign, which aims to foster innovation, facilitate investment, improve skill development, and build the best manufacturing infrastructure in the country

• This scheme does not require any collateral or security

• The funds borrowed under this scheme can only be used for commercial purposes

• The Indian government recently announced that the Mudra Shishu category will be eligible for certain benefits under the Atmanirbhar Abhiyan. The advantages are as follows:

  • Borrowers in the Mudra Shishu category will be eligible for relief of up to ₹1,500 Crore.

  • Mudra Shishu borrowers will receive an interest subsidy of ₹1,500 Crore.

  • The Government of India will give fast recipients a 2% discount on their interest rate for a year.

Tips to Get Mudra Loans at Low Interest Rates

Here are some tips on how to get Mudra loans at a lower interest rate:

• Choose the Right Category - Apply for the right category: Shishu, Kishore, or  Tarun. Applying for the right category can impact your interest rates.

• Keep a Good Credit Rating - A good credit score can help you secure lower interest rates.

• Compare Deals - Different lenders may offer different interest rates. Compare lenders to find the best loan terms for you.

• Shorter Repayment Period - A shorter tenure may result in a lower interest rate.

• Prepare a Detailed Business Plan - With a well-prepared business plan that shows your experience, market potential, and how you will utilize the loan, you can get better loan terms.

• Explore Government Subsidies - Look out for government schemes and subsidies available for your business sector.

What Exactly is the Pradhan Mantri Yojana?

The Pradhan Mantri Yojana was launched in 2015 with the goal of assisting small businesses in expanding and succeeding. Companies from both the profit and non-profit sectors can apply for a loan under this scheme, with a loan amount of up to ₹10 Lakh available to help them get started.

The following companies are eligible for a loan under the Pradhan Mantri Yojana scheme:

• RRBs (Railway Recruitment Boards) 

• Institutions of Microfinance (MFIs) 

• Banks, commercial 

• Non-Banking Financial Corporations (NBFCs) 

• Small Finance Banks

Women Entrepreneurs Can Get Mudra Loans

Mudra Yojana under PMMY encourages women's entrepreneurship by providing collateral-free business loans at reduced or concessional interest rates to private and public sector banks, NBFCs, and Micro Finance Institutions (MFIs). 

The maximum loan amount available under the Mudra Yojana for female entrepreneurs is ₹10 Lakh, with a repayment period of up to 5 years. Mudra loan eligibility for women is the same as it is for individuals and businesses. For women entrepreneurs, nil to nominal processing fees and foreclosure fees are charged on the sanctioned loan amount.