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, 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, and around 45% of the manufacturing output, and approximately 48% of the country’s exports.
Learn more about – What Are MSMEs? Its Definition, Benefits, Registration Process And Classifications
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.
Learn more about – How To Get MSME Loan For New Businesses? Explore The Loan Schemes For MSME Businesses
Key Features of Mudra Loan Under Pradhan Mantri Mudra Yojana
Mudra loans can only be availed by individuals, MSMEs, enterprises, or businesses engaged in Manufacturing, Trading, and Services Sectors, only.
Given below are some of the unique features of the Mudra loan –
|Interest Rate||Varies from bank to bank, depending on business requirements.|
|Minimum LoanAmount||There is no minimum loan amount.|
|Maximum Loan Amount||Up to 10 Lakhs|
|Repayment Tenure||From 3 years to 5 years|
|Processing Charges||No Processing Charges|
Products Offered for Businesses Under Pradhan Mantri Mudra Yojana
Under the Pradhan Mantri Mudra Yojana, the loan schemes are classified into three main categories.
Below mentioned are the name and the amount offered under each loan scheme:
|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 equipments, 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.|
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Benefits of Mudra Loan Under PMMY
- Wide range of loan amounts: The Mudra loan scheme offers loans ranging from Rs. 50,000 to Rs. 10 lakhs, making it suitable for various types of MSMEs.
- Flexibility in repayment: Borrowers have the flexibility to repay the loan in monthly, quarterly, half-yearly or yearly installments, based on their cash flow requirements.
- No collateral requirement: As mentioned earlier, Mudra loans do not require collateral, which means borrowers do not have to pledge any assets to avail the loan.
- No prepayment charges: Borrowers can prepay the loan amount without any prepayment charges or penalties.
- Easy application process: The application process for Mudra loans is simple and can be done online or through designated banks and NBFCs.
- Low interest rates: Mudra loans come with attractive interest rates that are lower than those offered by traditional loans.
- Boost to entrepreneurship: The Mudra loan scheme is designed to promote entrepreneurship and self-employment by providing easy access to credit facilities.
- No processing fees: The Mudra loan scheme does not charge any processing fees, making it a cost-effective financing option for MSMEs.
- Sector-specific loans: The Mudra loan scheme also offers sector-specific loans for businesses engaged in activities such as agriculture, poultry farming, food processing, etc.
Learn more about – Benefits Of MSME Registration In India
Purpose of Mudra Scheme Under PMMY
The Mudra Scheme under PMMY supports the following income-generating activities –
1. Commercial Vehicle
Mudra finance for machinery and equipment can be used to purchase commercial transport vehicles like tractors, auto-rickshaws, taxis, trollies, tillers, goods transport vehicles, 3-wheelers, e-rickshaws, etc.
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2. Service Sector Activities
Loans are given for starting businesses like salons, gyms, tailoring shops, medical shops, repair shops, and dry cleaning and photocopying shops, etc.
3. Business Activities for Traders and Shopkeepers
Loans for Setting up shops, service enterprises, trading and business activities, and non-farm income-generating activities are given.
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4. Agri-allied Activities
Activities related to businesses in agri-clinics and agribusiness centers, food & agro-processing units, poultry farming, pisciculture, beekeeping, sorting, livestock-rearing, grading, aggregation agro industries, diary, fishery, etc. can get loans.
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Required Documents for Mudra Loan Under PMMY
- Self-written business Plan
- Duly filled application with 2 recent Passport-sized photographs
- KYC documents of Applicant and Co-applicants- Passport, Voter’s ID card, Aadhar Card, Driving License, PAN card, Utility Bills (Water/Electricity Bills)
- Proof of belonging to a special category, such as SC, ST, OBC, Minority, etc. (if applicable)
- Last 6 months’ bank statement
- Business address and tenure proof, if applicable
- Any other documents required by the bank
Note – The Mudra loan application form to be filled and submitted is similar to the case of the Shishu and Kishor loan scheme, whereas it is separate for people applying for the Tarun loan scheme.
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