How to Get a Mudra Loan: A Step-by-Step Guide

How to Get a Mudra Loan: A Step-by-Step Guide

The Micro Units Development and Refinance Agency (MUDRA) scheme was launched by the Government of India in 2015 to provide financial support to small businesses and micro-enterprises in the country. The MUDRA loan is aimed at fostering entrepreneurship and improving the accessibility of credit for non-corporate, non-farm small businesses. The loans are available through various banks and financial institutions under the Pradhan Mantri Mudra Yojana (PMMY).

MUDRA loans are primarily designed for small-scale businesses, startups, and micro-entrepreneurs in sectors such as manufacturing, trading, and services. These loans are categorized into three categories based on the loan amount: Shishu, Kishor, and Tarun.

In this article, we will walk you through the process of how to get a Mudra loan, its eligibility criteria, and important details.

CLICK THIS LINK SEE THE VEDIO FOR APPLYING MUDRA LOAN

Types of MUDRA Loans

The MUDRA loan is divided into three categories based on the loan amount:

1. Shishu Loan:
   • Loan Amount: Up to ₹50,000.
   • Ideal for: Micro businesses or start-ups with a small capital requirement.
2. Kishor Loan:
   • Loan Amount: ₹50,000 to ₹5 lakh.
   • Ideal for: Businesses that have been running for a while and need additional funding for expansion or scaling up.
3. Tarun Loan:
   • Loan Amount: ₹5 lakh to ₹10 lakh.
   • Ideal for: Established businesses looking for larger amounts of funding to further grow their operations.

Eligibility Criteria for MUDRA Loans

The eligibility for a MUDRA loan depends on the nature of the business, the type of loan applied for, and other factors. Generally, the following criteria apply:

1. Type of Borrower:
   • The applicant should be an individual, a business, or a company engaged in non-farm, non-corporate activities.
   • The borrower should be an entrepreneur involved in the micro-enterprise sector.
   • Startups, small traders, artisans, and small manufacturers can apply for MUDRA loans.
2. Purpose of Loan:
   • Loans are provided for business purposes such as purchasing equipment, machinery, raw materials, or even for working capital.
3. Repayment Capacity:
   • The applicant should have the ability to repay the loan based on their business’s revenue and cash flow.
4. Age:
   • The applicant should be at least 18 years of age at the time of applying for the loan.
5. Credit History:
   • A positive credit history is essential. However, MUDRA loans are generally given to businesses that do not have a formal credit history, provided they meet the other criteria.

Steps to Apply for a MUDRA Loan

1. Determine the Loan Type:
   • First, assess the size and nature of your business to determine which category of MUDRA loan you need: Shishu, Kishor, or Tarun.
2. Prepare Required Documents:
   • You will need to provide certain documents as part of the application process. These generally include:
     • Proof of identity (Aadhar Card, PAN Card, etc.)
     • Proof of business (business registration documents, GST registration, etc.)
     • Bank statements or financial statements.
     • A detailed business plan (for larger loans, especially under the Kishor or Tarun categories).
     • Photographs and address proof.
3. Visit a Bank or Financial Institution:
   • MUDRA loans are offered by various banks, NBFCs (Non-Banking Financial Companies), and MFIs (Micro-Finance Institutions). You can approach the nearest branch of your preferred financial institution or apply online through their website.
   • Many public sector and private sector banks such as SBI, Bank of Baroda, ICICI, HDFC, and others offer MUDRA loans.
4. Online Application Process:
   • Several banks and financial institutions now allow online applications for MUDRA loans. You can fill out the application form on their respective websites, upload the required documents, and submit your application.
   • Alternatively, you can use the official MUDRA website (www.mudra.org.in) to explore further loan options and even apply through the online portal.
5. Loan Assessment:
   • Once you submit the application, the bank will assess your eligibility based on your credit score, business plan, and other financial aspects.
   • For smaller loans under the Shishu category, the process is generally quicker, while loans for larger amounts may involve more detailed scrutiny and due diligence.
6. Loan Approval and Disbursement:
   • Upon successful approval, the loan amount will be disbursed to your account. The disbursement process can take anywhere from a few days to a couple of weeks, depending on the loan type and documentation.

Key Features of MUDRA Loans

1. Collateral-Free: MUDRA loans are generally offered without the requirement for collateral or security, which makes it easier for small entrepreneurs to access funds.
2. Subsidized Interest Rates: The interest rates are competitive, and some banks offer lower rates for certain categories of borrowers. Rates can vary depending on the loan amount and your credit profile.
3. Repayment Tenure: The repayment tenure can range from 3 to 5 years, depending on the loan amount and the borrower’s repayment capacity.
4. No Processing Fees: Many banks offer MUDRA loans with minimal or no processing fees, making them more accessible.
5. Support for Business Growth: The MUDRA loan scheme encourages businesses to scale up and grow, making it a valuable tool for entrepreneurs who need capital for expansion. 
   

   CLICK THIS LINK SEE THE VEDIO FOR APPLYING MUDRA LOAN