Mudra Loan

Salient Features of the Mudra Loan:

The following mentioned features of the mudra loan distinguish this scheme over several others offered by the government;

1. The amount availed by this loan can be used to fulfil the working capital requirements of the availing company
2. Mainly, is it aimed at serving industries that are engaged in manufacturing, trading and services
3. Both, existing companies as well as new ones can apply for the pm mudra loan
4. The tenure of the mudra loan ranges from 3 years to 5 years, depending on what is agreed upon at the time of processing
5. The mudra website and mudra app are well equipped enough for anyone to be able to directly apply online
6. Enterprises have complete liberty to utilise the funds obtained via this loan for purchase of equipment, buying machinery, expansion of business, restructuring of business, hiring competent staff, additional working capital and many more
7. No collateral or additional security via a third party is required
8. There are three products under the mudra loan scheme, offering versatility to borrowers

Benefits of Mudra Loan

There are several benefits associated with the Mudra loan scheme, some of which are stated below;

1. No collateral or third party security is needed to avail any of the mudra schemes
2. The Mudra loan interest rate is very affordable and doesn’t exceed 1% on a monthly basis
3. Withdrawing the sanctioned amount with the help of a Mudra loan card is very easy without the need of making a physical visit to the bank.

What are the Mudra Loan Products?

The Mudra loan is offered in three different variants, namely, ‘Shishu, Kishor and Tarun’. These are categorized based on the level of development and monetary requirements of the micro company. Once the loan is sanctioned, these funds can then be bifurcated towards capital needs, salaries, additional operating costs, etc. These three products are termed as Mudra loans. Let us take a look at these Mudra loan products in detail.

1. Sishu Yojana

In this category, micro or small business owners have the utmost advantage as they can apply for the amount of up to Rs. 50,000. For those companies that require a small capital to be able to commence their business, the shishu yojana works the best. For being able to successfully apply to this category, the business owners will need to give clear details of their business ideas in addition to quoting the type and quantity of machinery needed for purchase. So much so, that even the machinery supplier’s details would need to be provided. Short of these details, chances of loan approval will be high. No processing fee will be applicable on this product. Required documents for this product would include;

1. Quotation of all purchases including machinery and equipment
2. Details of all purchases
3. Details of supplier/s that will provide machinery and equipment

2. Kishor Yojana

Kishor under the Mudra scheme is a category which is ideal for business owners who have an established business and are in pursuit of expanding it further. Applicants can seek loan amount that ranges from Rs. 50,000 – Rs. 5 lakhs. To be able to successfully apply for Kishor, applicants must submit a completed application form along with required documents which will establish a clarity and status of their company. The documents that will specifically be required for this product under Pradhan Mantri Mudra loan are;

1. Account statements from an existing banker for the latest six months (if any)
2. Balance sheet dating from the last two years
3. Memorandum of Association (MOA) (if any)
4. Articles of Association (AOA) (if any)
5. An estimated balance sheet for a one year or the entire tenure of the loan
6. Account of successful sales in the current financial year, before the application of loan
7. Income tax/ Sales returns
8. A report that will demonstrate the technical as well as economic sustainability of the business

3. Tarun Yojana

This, just like Kishor is a Mudra loan scheme that offers financial aid in the form of loan to any small business owners that are looking to expand their business. Borrowers can seek an amount up to Rs. 10 lakhs, provided he or she meets the stipulated eligibility criteria. The Mudra loan documents needed to be submitted under this loan include;

1. Balance sheet dating from the last two years
2. A report that will demonstrate the technical as well as economic sustainability of the business
3. Memorandum of Association (MOA) (if any)
4. Articles of Association (AOA) (if any)
5. Account statements from an existing banker for the latest six months (if any)
6. An estimated balance sheet for a one year or the entire tenure of the loan
7. Account of successful sales in the current financial year, before the application of loan
8. Income tax/ Sales returns
9. Proof of identity (PAN card, Aadhar card, drivers license, voter’s ID, etc.)
10. Proof of address (Passport, driver’s license, Aadhar card, etc.)
11. SC, ST, OBC, etc. certificates (if any)

Purposes of Mudra Loan

Micro, small and medium enterprises (MSME’s) play an important role in contributing to the economy of the country. The Mudra loan helps MSME’s by fulfilling the following mentioned purposes;

1. Commencing a new business
2. Expanding and growing an existing business
3. Training as well as hiring of competent staff
4. Purchasing of machinery
5. Achieve working capital for business
6. Purchase of commercial vehicles
7. Purchase of equipment

MUDRA loan Interest Rate:

The interest rate applied on MUDRA loans are based on RBI defined MCLR (Marginal Cost of Lending Rate) with the following break-up.

Up to Rs.50000:

• Micro Enterprises: MCLR + SP
• Small Enterprises: (MCLR + SP) + Bank Load

Above Rs.50000 up to Rs.2 lakhs:

• Micro Enterprises: (MCLR + SP) + Bank Load
• Small Enterprises: (MCLR + SP) + Bank Load

Above Rs.2 lakhs up to Rs.10 lakhs:

• Micro Enterprises: (MCLR + SP) + Bank Load
• Small Enterprises: (MCLR + SP) + Bank Load

Documents Required to Apply for Mudra Loan

Though the documents might differ from the type of product chosen, the following mentioned documents would be the generic requirement when applying for Mudra loan;

1. Identity proof such as Aadhar card, PAN card, Driver’s license, voter’s ID, etc.
2. Proof of address such as Aadhar card, passport, utility bills, bank statements, etc.
3. Passport sized photos of the borrower/applicant
4. Address proof of enterprise if applicable
5. Identity proof of license of the enterprise if applicable
6. Quotation proof of merchandise/equipment/plant to be purchased

Application Procedure for Mudra Loan

Many banks offer the facility of this loan and the Mudra loan application can be applied for following the below mentioned steps;

1. Visit the official website – https://www.mudra.org.in/ and then download the application form.
2. Fill this form with accurate details such as name, address, number, and KYC details
3. The required Mudra loan documents then need to be submitted along with the application form
4. Additional procedures required by the bank, then need to be fulfilled. (This will differ slightly from bank to bank)
5. Selected bank will then verify the documents
6. Loan amount then gets credited to the account post verification