Learn important features, benefits, eligibility details, and required documents for applying for a MUDRA Shishu loan
The MUDRA Shishu Loan is one of the loan categories under the Pradhan Mantri Mudra Yojana (PMMY). Enterprises, startups, and individuals running small-scale businesses like shops, service units, or even cottage industries can get loans of up to ₹50,000 to kickstart or expand their operations. You do not have to submit collateral to get the loan, which comes with flexible repayment options.
Features & Benefits of the Shishu MUDRA Loan
Shishu loans under the MUDRA scheme are designed to help small businesses meet their capital needs. Here are some of the salient features and benefits of the MUDRA Shishu loans:
Zero processing fee
Some banks may charge an upfront fee in accordance with their internal guidelines. However, the upfront fee and/or processing charges for Shishu loans are waived off by most Banks. The government has made it so that the Shishu loan is available without any processing fees to help small businesses and entrepreneurs access credit for their working capital needs without much effort.
Affordable interest rates, generally not exceeding 12% p.a.
Interest rates will be charged in accordance with the bank’s policy. However, the interest rates will be nominal as this is a government-backed scheme. RRBs, scheduled commercial banks and cooperative banks that wish to get refinance from MUDRA will have to peg their interest rates, in accordance with the advice offered by MUDRA Ltd., periodically.
Repayment tenure of 3 to 5 years
Depending on the loan category you choose, bank policies, your creditworthiness, business’ profitability and other features, you can get a repayment tenure of up to five years. This will give you ample time to meet your financial obligations and repay them.
Online as well as in-person application process
Depending on your preference, you can choose to apply for the Shishu loan through the online mechanism or the offline mechanism. Many banks also offer fully digitalised and paperless application processes.
Loan amount of up to ₹50,000
Under the Shishu loan category, you can get a loan of up to ₹50,000 to meet your working capital requirements.You can easily apply for a MUDRA Shishu Loan for your business online by following the below-mentioned steps:
Step 1: Visit the Udyami Mitra website at https://udyamimitra.in/ and click on “Apply Now”
Step 2: Enter name, email address and mobile number at the bottom of the page and click on “Generate OTP”. Now enter the OTP received and complete the process by clicking on the ‘Verify OTP’ button
Step 3: Fill in all personal and professional details on the following page and click on the “Apply Now” button under “Loan Application Center”
Step 4: Select ‘Shishu’ to apply for a Shishu Loan
Step 5: Now, you need to enter a few details about your business such as background information of the proprietors and directors of the firm, future working capital estimate, lender of preference, etc
Step 6: Once the above information has been filled in, click on the ‘Submit’ button. Finally, you will be taken to a declaration page. Tick the appropriate checkbox to continue and complete the application process
Once you complete your MUDRA Shishu Loan application process, a success message with the loan application number will be displayed on the screen. Note the reference number for future correspondence.
Alternatively, you can also apply for the Shishu loan offline by visiting your nearest branch of the bank you wish to get the MUDRA Shishu loan from. All you need to do is obtain the MUDRA loan application form from a bank official, fill in all the requisite details in the form and attach all the relevant documents and submit the same to the bank official. Once all your documents are verified, your loan shall be approved and the amount shall be disbursed to your bank account.
Under the Atma Nirbhar Bharat Package, the Government of India announced the ”Interest Subvention Scheme for MUDRA – Shishu Loans” in May 2020 with an objective to help small businesses mitigate the impact of the COVID-19 pandemic. Under this scheme, Mudra Shishu Loan beneficiaries were provided an interest subsidy of 2% for a period of 12 months.
The MUDRA Shishu Loan scheme is a boon for aspiring entrepreneurs in the country as it gives small loans at affordable interest rates to fulfil any working capital needs. With a MUDRA Shishu loan, you can get a credit of up to ₹50,000 to fund your working capital needs. Once you expand the business to higher levels, you can also consider Kishore and Tarun loans under the MUDRA scheme which offer higher loan amounts and are aimed towards bigger and more established business enterprises.
FAQs for MUDRA Shishu Loan
What is the tenure of MUDRA Shishu loan?
The tenure for the MUDRA Shishu loan can range from 3 years to 5 years, depending on your loan provider.
What is the interest rate of a Shishu loan?
The interest rates of the MUDRA Shishu loans can vary depending on your loan provider and your creditworthiness. However, since this is a government-backed loan scheme, the interest rates will be nominal.
Is insurance mandatory for a MUDRA Shishu loan?
No, Shishu loan borrowers are not required to offer any insurance or security.
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