Mudra Loan

The Pradhan Mantri Mudra Yojana (PMMY) was introduced by the Government of India in 2015, with the goal of providing financial support to Micro, Small, and Medium Enterprises (MSMEs) in India through MUDRA loans. Banks and other financial institutions offer up to ₹10 Lakhs for a range of business requirements related to working capital, equipment purchase, infrastructure development, inventory purchase, marketing expenses and more.

 

The eligibility criteria for a MUDRA loan are simple and easy to meet. Eligible small businesses can get easy access to credit, without having to submit a collateral.

The interest rate on loans under the PMMY depends on the financial institution providing the loan. These institutions set the rates as advised by Micro Units Development & Refinance Agency (MUDRA) Ltd. and update them periodically. 

 

Here is the maximum cap on interest rate on MUDRA loans available for beneficiaries:

Here are some of the key benefits of a MUDRA loan:

You can get access to three types of MUDRA loans and choose one as per your financial requirements and purpose. 

Shishu Loan

You can get a loan of up to ₹50,000 and use it for your working capital or other requirements.

Kishore Loan

The loan amount for this category ranges from ₹50,000 to ₹5 Lakhs. This funding can help cover daily business expenses as well as finance fixed investments, such as purchasing machinery and equipment.

Tarun Loan

Under this category, you can secure funding between ₹5 Lakhs and ₹10 Lakhs. It is ideal for stable small enterprises that require significant capital for essential business investments, such as scaling up operations or entering new markets.

You can apply for a MUDRA loan online or offline from a range of financial institutions. These include:

• Public Sector Banks

• Private Sector Banks

• Regional Rural Banks (RRBs)

• Small Finance Banks (SFBs)

• Microfinance Institutions (MFIs)

 

While the eligibility for a MUDRA Loan may vary depending on the concerned financial institution, here are the basic requirements for qualification:

Implementing agencies provide credit under this scheme for a variety of purposes that lead to income generation and employment creation. Here are some of the businesses and business activities that are eligible to get a MUDRA loan:

Food Sector

Businesses eligible for MUDRA loans include those involved in the food and food processing industry, like production of papads, pickles, jams or jellies. It also covers snack shops and small food stalls, preservation of agricultural products in rural areas, etc. 

 

Additionally, it includes ice production and ice cream manufacturing, as well as the production of biscuits and bread.

Textile Product Sector/Activities

Activities related to handloom, powerloom, and khadi include chikan work, zari and zardozi work, among others. This also includes design, knitting, stitching, and the production of other non-garment items.

Transport Vehicles

This includes vehicles such as auto-rickshaws, three-wheelers, e-rickshaws, small goods carriers, and taxis. Additionally, tractor trolleys, tractors, and power tillers for commercial use also qualify. It also covers two-wheelers used for commercial purposes.

Community, Social and Personal Service Activities

Businesses eligible for loan include beauty parlours, salons, gyms, and dry cleaning services. Boutiques, tailoring shops, pharmacies, and courier services, among others, are also covered.

Agricultural Activities

Eligible activities include food and agro-processing, aquaculture, poultry farming, livestock rearing, and more. It also includes beekeeping, grading and sorting, dairy operations, fisheries, agri-clinics, etc.

Business Loans for Merchants and Shop Owners

These loans are available for individuals operating shops and service enterprises. The latter involves engaging in trading and business activities, and non-farm income-generating activities.

Equipment Financing Project for Micro Units

Credit for establishing micro-enterprises by getting essential machinery and equipment.

Before you go ahead and apply for a Mudra loan, you must ensure that a handful of documents are at your disposal. To apply, you will need to submit the following:

• Proof of identity: Aadhaar card/PAN card/Voter ID/passport/bank passbook/driving license

• Proof of address: Aadhaar card/electricity bill/water bill/government-issued documents

• Copy of your bank statement for the past 3 months

• Photographs

The MUDRA Card is an innovative product that makes credit easily accessible to small businesses while providing flexibility. It is a debit card issued to you when your MUDRA loan account is opened.

 

Cardholders can withdraw amounts as per their approved loan limits, making it easier to cover various expenses without the hassle of manual transactions.