A Micro-Units Development and Refinance Agency Loan are provided under an Indian Government scheme called the Pradhan Mantri Mudra Yojana or PMMY. It was initiated in 2015 to help small-scale businesses succeed and expand. Companies and businesses belonging to both the non-profit and profit sectors can secure a Loan under this.

Types

The PMMY scheme makes it eligible for applicants to avail of Business Loans ranging from Rs. 50,000 up to Rs. 10 lakh. Based on your Mudra Loan eligibility, you can avail of the following Mudra Loans:

Tarun

This can be availed of by established and existing MSMEs where they can apply for Loans ranging between Rs. 5 and 10 lakh.

Kishor

This Loan ranges between Rs. 50,000 and Rs. 5 lakh and can be availed of by existing firms to meet the needs of their working capital or their expansion requirements.

Shishu

Applicants under this scheme can avail of small Business Loans that go up to Rs. 50,000. This can be used to start a new business or to meet daily expenses.

Eligibility requirements

The Mudra Loan eligibility criteria include:

• Loans can be availed of by new as well as existing businesses
• There is no need for third-party security or collateral
• Applicant should be at least 18 years of age but not more than 65 years of age
• Loans are offered by Public and Private Sector Banks, Small Finance Banks Regional Rural Banks, and Micro Finance Institutions.
• Loans can be availed of by business entities engaged in the manufacturing, service, and trading sectors only.
• A Mudra Loan can only be granted to Indian citizens.

Required documents

• Duly filled-up application form
• Valid photo identity proof
• Bank statement for the last six months
• Proof of current address
• Proof of income, like the latest Income Tax Return, etc.
• Proof of ownership of office or residence
• Proof of continuity of business
• Trade references
• Recent passport-sized photograph of the applicant

Benefits

The benefits of Mudra Loan application are:

• These Loans are collateral-free. Hence, you do not have to provide security or collateral against it.
• Interest rates on a Mudra Loan typically depend on the applicant’s profile and are ultimately decided by the lender. However, interest rates may be quite low, and women entrepreneurs may be eligible for concessional rates.
• Micro and Small businesses engaged in income-generating activities are eligible for this Loan.
• The Loan can be used as Working Capital Loan, Overdraft facility, and Term Loan.
• This Loan is covered under the Credit Guarantee Scheme of the Government of India.