What is a Mudra loan?

PMMY or Pradhan Mantri Mudra Yojana scheme was started in the year 2018. It was started to finance the micro or small scale industries, to help them grow or expand their business.

The amount used to facilitate finance to the small scale industry is up to Rs. 10 Lakh. Under the Mudra scheme, a subsidiary of SIDBI is provided to the Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs so that they can further lend loans to the non-corporate, non-farm small/micro-enterprises.

Under the Mudra loan scheme details, there are three different loans such as Shishu, Kishore and Tarun. These are based on the type of stage the micro-industry is in.

Shishu Yojana

Shishu loan is given to the micro or small scale industry to grow their startups which they have just begun. It’s generally given up to Rs. 50,000. It can be used for those who want to start their small business. Before getting the loan you are seeking you need to present your business idea to the lender and only then can you avail of the loan.

Kishore Yojana

Kishore loans are loans given to a business that has already been in the business for quite some time. These loans fall in the brackets of around Rs. 50,000 to Rs. 5 lakh. Kishore Loan is used by the business to expand their business and grow them to a viable enterprise. To apply for the loan you need to fill up the application form and present the required documents to the lender.

Tarun Yojana

Tarun loan is given to small industries who want to grow their business. The loan given under Tarun Yojana is up to Rs. 10 lakh.

Mudra loan assists Micro, Small and Medium Scale Enterprises to grow their business. The loan helps them in starting a new business, purchasing the necessary machinery and a smooth flow of working capital. It also helps in purchasing equipment and hiring the staff.

So Who Can Apply for the Loan?

Business vendors and shopkeepers can apply for the loan. People in the textile industry can opt for the loan. The food production sector and agricultural activities can go for the loan. Artisans and small manufacturers can apply for the loan. Repairing shops, truck owners, self-proprietors and service sector firms can also go for the Mudra loan.

What are the Documents Required for the Loan?

  • You will need passport-sized photographs of the applicant
  • You will need proof of identity such as an Aadhaar Card, Passport, Voter I-Card, Driving License, etc.
  • You will require residential Proof such as Aadhaar Card, Passport, Bank statements, telephone or electricity bill
  • Document such as proof of Address of the enterprise will be needed.
  • Any proof of identity and license of the enterprise.
  • Any proof of quotation of items to be purchased for business use.

The Bottom Line

Mudra loan was started to empower small and medium scale industries. It was started so that these industries thrive and expand their business. E-Mudra loans can be received by both new and existing micro and small enterprises. Mudra Loan assists the startups and the existing business, those who fall under MSMEs with finance and easy flow of capital in their business. For more check out Finserv MARKETS.