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.
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.
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.|
Benefits of Mudra Loan Under PMMY
- The Mudra loan scheme offers credit facilities to MSMEs engaged in manufacturing, trading and service sector activities. These are currently the main areas of income generation.
- One of the key benefits is that borrowers are not required to provide security or collateral. Additionally, there are no processing charges on Mudra loans. Furthermore, the loans are covered under the Credit Guarantee Scheme.
- The credit facilities extended under the PMMY can be used for a variety of purposes. The credit from Mudra loans can be used for term loans, overdraft facilities, or to apply for letters of credit and bank guarantees.
- Business owners belonging to SC/ST get special concessions on their interest rates if they avail a MUDRA loan.
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.
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.
Learn more about – What Is RoDTEP Scheme? Its Benefits, Requirements For Traders & Exporters
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.
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.
Related Read About
- Top 5 Government Schemes For Startups And MSMEs In India
- How To Apply For Government Loan Schemes & Subsidies For Small Business In India?
- Loans For Women Entrepreneurs – List Of 10 Business Loan Schemes For Women Entrepreneurs In India
- Grab MSME Loan In 59 Minutes – The Detailed Guide To PSB Loan Benefits & How To Apply
- SHWAS And AROG Loan Schemes By SIDBI To Support MSMEs – Know The Scheme Benefits & Its Application Process
- What Is RoDTEP Scheme? Its Benefits, Requirements For Traders & Exporters
- What Is SFURTI Scheme? Its Eligibility, Application Process, Subsidy & Benefits Explained
- What Is The Difference Between Stand-Up India And Startup India Schemes?
- What Is Cent Kalyani Scheme? Its Objectives, Loan Interest Rate And How To Apply?
- What Is An MSME Certificate? How To Apply For Udyam Registration Certificate? Benefits, Eligibility & Requirements
- What Is Udyog Aadhar? Step-By-Step Registration Process And Benefits Of Udyog Aadhar For MSME Explained
- What Are The Business Licenses? Explore The List Of Business License & Permits In India
- Types Of Companies And Registrations – Explore The 7 Types Company Registration In India