Ever since the liberalization of the Indian economy in the 90s, MSMEs have played a huge role in the development of the county. They have constantly supported the up-gradation of technology, and infrastructure development, and triggered the modernization of the country and our society as a whole.
In terms of numbers, MSMEs contribute a staggering 30% to the country’s GDP, around 45% of the manufacturing output, and approximately 48% of the country’s exports.
It is due to such huge numbers they’re vital to our economy. However, with the start of the pandemic in early 2020 most MSMEs went into a free fall due to the sudden closure of all avenues through which they did business. To revitalize the economy and businesses the Government of India understood the need to give out loans to businesses. The Pradhan Mantri Mudra Yojana is one such initiative by the Government of India that offers loans to individuals, SMEs, and MSMEs.
|SHISHU Loan||For start-ups and new businesses loans up to Rs. 50,000 can be availed under the Mudra Shishu Loan scheme.|
|KISHOR Loan||For buying equipment, new machinery or raw materials existing enterprises can get loans ranging from Rs. 50,001 to Rs. 5,00,000 under the Kishor Loan Scheme.|
|TARUN Loan||For established businesses and enterprises loans ranging from Rs. 500,001 to Rs. 10,00,000 are available under Tarun Loan Scheme.|
5 benefits of availing of a PMMY scheme.
- Avail high loan amount under Mudra scheme
The loan amount offered under the mudra yojana scheme starts from Rs. 50,000 and goes up to Rs. 10 lakh to start-up enterprises, small business units, and MSMEs. The credit products offered under the Mudra loan scheme help micro-units or small businesses to grow and expand their businesses or manage operational needs through easy finance schemes.
- No collateral required
The Pradhan Mantri MUDRA Yojana loan is an unsecured type of business loan that means the loan borrower does not require to pledge their valuable assets as collateral to the lender.
- Hassle-free services
The Micro, Small, and Medium Enterprises (MSME) sector have, for a long, been overlooked because of its lack of reliable financial information and presumption of not being able to generate as much revenue. As a result, the growth of this very potent sector has remained stunted and suffered due to a lack of access to capital. The Mudra loan scheme addresses this issue by offering the MSME sector quick services with easy clearances, all of which have helped the sector immensely.
- Favourable for small or micro firms
Micro Credit Scheme is offered to the individuals for specific income-generating micro-enterprise activity under the Pradhan Mantri MUDRA Yojana. This scheme offers financial backing for the empowerment of micro-small businesses as well as startups. Under the Pradhan Mantri MUDRA Yojana scheme, the government is the credit guarantee for the borrower. That means if the loan borrower fails to pay off the loan, the government bears the loan’s responsibility. The smallest business units like shopkeepers and food vendors can also get benefits from the Pradhan Mantri MUDRA Yojana.
- The loan amount can be utilized for multiple purposes
Mudra Loan scheme is directed towards vendors, and shopkeepers, providing working capital loans through the Mudra Cards, providing equipment financing for micro-units along with transport vehicle loans. The loan facility is extended under the PMMY scheme for any type of fund or non-fund based needs. By opting for Pradhan Mantri MUDRA Yojana, people can avail of business loans for small amounts at nominal interest rates from legitimate lenders.
Types of Financial Institutions to Apply for Mudra Loan
- Private sector banks
- Public sector banks
- Small finance banks
- Regional rural banks
- Microfinance institutions.
Procedure to Apply for Mudra Loan Offline
If you are not comfortable applying for a Mudra loan online, you can always opt for the offline process. You will find the step-by-step process of applying for a Mudra Loan offline below.
Step 1: Visit a PMMY-authorised bank or NBFC of your choice.
Step 2: Ensure you have a self-written business plan.
Step 3: Ask for the Mudra loan application form and fill in the required details.
Step 4: Submit the application form along with passport-size photographs and the documents.
Step 5: Once all of the documents have been verified successfully, the loan will get approved and the desired amount will be credited to the mentioned bank account.
Documents Required for Mudra Loan Application
The list of documents required for Mudra loan application is given below:
- A Mudra application form with two of your most recent passport-sized photographs
- KYC documents such as your passport, voter ID card, driving license, Aadhaar card, utility bills (water or electricity), PAN card
- Special identity documents such as your caste certificate in case you belong to the SC/ST or any other special category
- A proof of your business income
- The address proof of your business
- A proof of establishment of your business (if in case you are already running an enterprise)
- Your bank account statements going back at least 12 months
- Your Income Tax Returns (ITR) for the past 2 years, if applicable
- Any other document requested by the bank officials