Mudra Loan Eligibility

Micro Units Development and Refinance Agency Ltd. [MUDRA] is a Non-Banking Funding Company (NBFC) that currently supports micro-enterprises in the country. It provides refinancing services to banks, MFIs, NBFCs to lend loans to micro-enterprises up to 10 lakh INR. The Pradhan Mantri MUDRA Yojana (PMMY) is a government initiative under MUDRA that provides refinance support to micro-businesses, small units, and MSMEs to expand and establish their businesses.

About Pradhan Mantri MUDRA Yojana (PMMY)

Pradhan Mantri MUDRA Yojana (PMMY) was launched in 2015 to help micro and small-scale businesses by handing out loans up to 10 lakh INR. Both profit and non-profit companies can avail a loan under this scheme to expand their business. Borrowers can avail a loan amount ranging from 50,000 INR to 10 lakh INR for a repayment tenure of up to 5 years. Submitting collateral or security or any third-party guarantee is not required to avail of the loan under this scheme. Besides, the processing fee and the foreclosure charges are nil or sometimes 0.5% of the loan amount.

Loan Amount Offered Under Mudra Scheme

There are three categories of Mudra loan products. These products are namely Shishu, Kishore, and Tarun. There is no limit to the minimum amount to be borrowed. However, the maximum limit is 10 lakh INR. Let us look at the three categories:

  1. Shishu provides maximum loan up to 50,000 INR for start-ups and individual entrepreneurs.
  2. Kishore provides a loan amount ranging from 50,001 INR to 5,00,001 INR for the requirement of capital to expand business for upcoming or existing businesses. 
  3. Tarun provides a loan amount from 5,00,001 INR to 10,00,001 INR for already established businesses to manage their cash flow.

What is the interest rate for the MUDRA Loan?

Depending on the profile of the applicant, the rate of interest varies. Both public sector and private sector banks offer MUDRA loans. However, the lender will set some guidelines for the final interest rate depending on the applicant after scrutinizing the applicant’s business requirements.

Some Purposes of Pradhan Mantri Mudra Loan Yojana?

There are several purposes that a MUDRA loan can fulfill when it comes to business. Some of them are listed below:

  1. Small scale business loans for shopkeepers, vendors, traders, and other trading activities.
  2. Financing equipment for small-scale industries.
  3. Loans for transport vehicles
  4. Working capital for businesses
  5. MUDRA loans are available to people working in food-related sectors such as agriculture, raising livestock, horticulture, fish farming, and apiculture.
  6. People using tractors, tillers, and two-wheelers for business applications can avail of this loan.

What are The Benefits of MUDRA Loan?

Here are some of the several benefits that MUDRA loan offer:

  1. Banking and financial services are obtained in rural and urban areas.
  2. Micro- and small-scale businesses and start-ups can have financial backing.
  3. Small loan amounts with affordable interest rates.
  4. No need for collateral or security to be submitted.
  5. Discounted interest rates for women are offered.
  6. The government bears the borrower’s credit. So, when they cannot repay the loan amount, it falls under the government’s responsibility.
  7. Accessible even at the remotest places where bank facilities are not available.
  8. The tenure of repayment can be extended up to 7 years.

What are The Eligibility Criteria?

These are requirements that you should meet to avail of a MUDRA loan:

  1. You have to be an Indian citizen.
  2. You need to own a micro, small scale, or start-up business.
  3. The minimum eligibility age is 18 years, while the maximum age is 65.
  4. It would help if you belonged to SC/ ST/ OBC category.
  5. You should not have any default in your past loans.
  6. You must have a good credit history. 
  7. People who own a new or existing business sort trade.
  8. Should have all the required documents

The eligible entities are individuals, start-ups, vendors, shopkeepers, retailers, manufacturers, and MSMEs. In addition, the eligible enterprises are Private and public limited companies, sole proprietorships, LLPs, partnerships, NGOs, and cooperative societies.

What Are the Documents Required?

  1. Filled application form based on the loan category.
  2. Any identity proof like Aadhar card, passport, PAN card, voter’s ID, driving license, etc.
  3. Address proof like utility bills like electricity bills, telephone bills, etc., or any other proof, having your registered address.
  4. Business establishment proof with address
  5. Two recent passport size photos of the applicant
  6. Caste certificate, if applicable.
  7. Quotation of the equipment, machinery, or product that the applicant wishes to purchase for the business.
  8. Bank statement of the last 6 months.

Activities Covered by MUDRA Loan

The eligible entities and enterprises involved in one or many of the following activities:

  1. Food products manufacturing
  2. Transport sector for both goods and passengers
  3. Textile manufacturing and products
  4. Agricultural activities
  5. Service activities like community, personal or social.
  6. Micro units requiring finance for equipment
  7. Trading or shopkeeping

How to Apply for Mudra Loan?

You can avail MUDRA loan easily and quickly. Firstly, get an application form from a lender and fill it out based on the category. Then, submit the filled application form along with the other necessary documents. And you are done –

Why for Business Loan?

When it comes to ease of seeking lending facility; we at Lendingkart score over others in a number of ways. We are a non-deposit NBFC in the business of lending providing credit with a range of products:

At Lendingkart, our focus is not on the past antecedents of the prospective borrower, but the potential and the credit risk of our clients with an emphasis on the current cash flows and business growth. We are well endowed with the services of our fin-tech start-up arm, providing an accurate assessment of the creditworthiness of clients through the accumulation of data from various sources and efficient analysis tools. The key factors that make us at Lendingkart the choice destination for our range of loan products are:

  • Though working out of Ahmedabad, Bengaluru and Mumbai at present, the services are extended pan India.
  • Ease of online application in full that takes only a few minutes to complete.
  • Fewer documents are sought.
  • The absence collateral security.
  • Disbursal of loans is the quickest in the industry, which is ensured in three days.

In fine, we at aim to provide a seamless credit experience to our clients to conveniently concentrate on the business rather than on the cash flow gaps.

Mudra Loan Eligibility FAQs:

1. What type of loan is a MUDRA loan?

MUDRA Loan is a term loan that a person or group can avail of persons to expand or kickstart their business.

2. Will my CIBIL/ credit score affect availing MUDRA loan?

No, your credit/ CIBIL score will not affect your MUDRA loan.

3. I am a college graduate. Can I avail a MUDRA loan?

Yes, anyone over 18 owning a business or trade is eligible to avail of this loan.

4. Should I possess a PAN card to avail MUDRA loan?

No, a PAN card is not mandatory for securing a MUDRA loan.
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