Mudra Bank Loan Yojana for Startups
Government of India is supporting emerging startups through various schemes. However very few startups are benefiting from such schemes due to criteria being placed for the schemes. For such businesses, Micro loan scheme known as Mudra Bank loan is really useful. In this article, we discuss how Mudra loan scheme works for emerging startups.
There are times when any business wants a financial push before establishing itself. In such case a lot of banks may put some obstacle in front of them. And government wishes to remove such obstacles. Some small business that are capable of paying microloans were not entertained by private banks prior to Mudra. Government addressed this gap and decided to offer help to the small business that needed microloan.
How this loan scheme works?
Loan under MUDRA
Loan is provided currently under three schemes in Prdhan Mnatri MUDRA Yojana. The three schemes are as following:
- Shishu: Loan of upto Rs.50,000/=
- Kishor: Loans of above Rs.50,000 to Rs.5 lakhs.
- Tarun: Loans of above Rs.5 lakhs to Rs.10 lakhs.
MUDRA Loan Eligibility
Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than 10 lakh can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY). The terms and conditions of the lendor would have to be followed for availing of loans under MUDRA. The lending rates are as per the RBI guidelines issued in this regard from time to time. Since, MUDRA is a refinancing institution, loans are not offered directly by MUDRA but through existing NBFCs, Financial Institutions, Banks, Primary Lending Institutions, etc.,
The target audience for MUDRA loans are millions of Proprietorship / Partnership Firms running a small manufacturing unit or service sector unit like shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.
How to apply?
You have to either download or ask for the scheme enrollment form from nearby bank. You’ll find this form in banks which are offering this service with the partnership with the Mudra bank.
- MUDRA Loan Application
- Business plan
- Proof of Identity like PAN / Drivers License / Aadhaar Card / Passport and more.
- Residence proof like recent telephone bill / electricity bill or property tax receipt and more.
- Applicant’s recent photograph less than 6 months old
- Quotation of machinery or other items to be purchased
- Name of supplier or details of machinery or prices of machinery
- Proof of identity / address of the business like tax registration, business license and more.
- Proof of category like SC/ST/OBC/Minority, if applicable
It is important to note that there is no processing fee or collateral requirement for obtaining MUDRA loan.
After the loan is sanctioned, the borrower gets the Mudra bank ATM from which he can withdraw the money. The money from this loan system is distributed using only the RuPay Mudra card. The ATM card is accepted in every ATM that allows withdrawal through RuPay system.