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Business motivation

MUDRA Loan: Eligibility Criteria And Documents Required

MUDRA loan was introduced by the government of India under the Pradhan Mantri Mudra Yojana (PMMY) to help smaller enterprises, non-corporate and non-forming, meet their financial needs both to cover up the capital as well as the operational costs to set and run a business. In this article, we will stress on the eligibility to apply for a MUDRA loan.

These loans have surely been designed to help the small and micro enterprises, however, there still are some eligibility criteria that a business or an individual needs to fulfill to qualify for getting a loan under this scheme.

Mentioned below are the entities that can apply for this loan.

  • Those with a minimum age of 18 years and a maximum of 65 can consider applying for this loan.
  • These loans can be provided to the non-farming non-corporate income-generating businesses in trading, manufacturing, and services.
  • The requirement of credit must be ₹ 10 Lakh or lower.
  • Businesses must be engaged in agriculture services from 1st April 2016.

What Are The Financial Bodies That Are Allowed To Give Out Mudra Loans?

  • Each and every bank, be it a public bank, a privately owned bank, or a regional rural bank, is eligible to provide these loans to small businesses, however, for banks to give out these loans, there are some criteria to fulfill.
  • For a bank to be providing MUDRA loans, it should  have to profitable for 2 consecutive years
  • The net performing assets for the public sector banks, private sector banks, and regional banks should not be more than 15%,10%, and 6%.
  • The net worth of the bank in question should be Rs 250 cr for the private and public sector, while regionals banks need to have a net worth of Rs. 50 cr

Who All Can Avail MUDRA Loan?

You might be wondering what are the kind of businesses that can actually move forward and benefit from these loans. Worry not, we have summed it up for you.

  • Individuals that identify themselves as Shopkeepers and vendors, can apply for a loan ranging up to ₹ 10 Lakh for different business activities such as covering the operational costs.
  • This loan scheme is super useful and beneficial for small businesses that are trying to make a mark for themselves in the textile industry. For example that deal in khadi work, knitting, weaving, etc.
  • Mudra funding can also provide benefits to the businesses that are into food services such as storage of food, tiffin services, and food stalls.
  • Loan under this scheme can be availed by the businesses that are into agricultural activities such as dairy farming, poultry, fishing, etc.
  • Businesses that are into social entrepreneurship and those serving other communities to provide services such as beauty parlors and salons, gymnasiums, dry cleaning shops, medical shops, tailoring shops, etc.
Documents for Vehicle Loan
  • application form of Mudra Yojana
  • Vehicle loan application form
  • 2 passport size photos
  • Identity proof such as Aadhaar Card, Passport
  • Address proof such as Aadhaar Card, telephone or electricity bill
  • Income proof
  • Bank statement for last 6 months
Documents for Business Installment Loan
  • application form of Mudra Yojana
  • Loan application form
  • 2 passport size photos
  • Identity & age proof such as Aadhaar Card, Passport
  • Address proof such as Aadhaar Card, telephone or electricity bill
  • Proof of ownership of the enterprise/residence
  • Proof of qualification, establishment, and business continuity
  • Trade references
  • 2 years ITR & CA certified financials
  • Bank statement for last 6 months
Documents for Business Loan
  • application form of Mudra Yojana
  • Loan application form
  • Identity & age proof such as Aadhaar Card, Passport
  • Address proof such as Aadhaar Card, telephone or electricity bill
  • Proof of ownership of the enterprise or residence
  • Proof of qualification, establishment, and business continuity
  • Proof of business continuity
  • last 12 months Bank statement 
  • Last two ITRs

We hope with this detailed account and prerequisites of MUDRA loan, it would be helpful for you to uncomplicate the entire process because post the documentation and application are the funds you have been trying so hard to get to establish your dream business. Give it a good thought and go for it.

Categories
Business motivation

MUDRA Loan Explained: All About Pradhan Mantri Mudra Yojana Loan For MSMEs

MUDRA is a praiseworthy effort of the government to provide financial aid to the non-corporate and non-farming Micro and small enterprises across India. MUDRA stands for Micro Units Development & Refinance Agency, which is aimed to provide loans of up to Rs 10 lakh to the enterprises who are eligible with the help of the eligible enterprises through the Commercial Banks, RRBS, Cooperative Banks, NBFC, etc.

What Is The Structure Of Mudra Loan?

There is a very interesting observation that everybody will make once they go through the structure of this scheme. The names of these products are based on the various stages of the development of human life.  Human beings go through various stages of their lives such as childhood, adulthood, and old age. Similarly, an enterprise also goes through various phases of development, hence the name of the products; Shishu, Kishore, and Tarun. Let’s acquaint ourselves with this structure briefly.

Shishu

This is that part of the structure which is specially designed for the enterprises in their nascent stages. All those enterprises who are in the process of establishing their business or thinking to start one can apply for a loan of up to Rs 50,000 under this product. 

Prerequisites
  • Machinery quotation and other items to be purchased
  • Details of the machinery to be purchased
  • Details of the machinery supplier
Kishor

It is pretty easy to predict what kinds of businesses can apply for a loan under this category. Every child grows up to be an adult someday and so does a business. This category is designed for all those businesses that are already established but looking for fresh funds in order to expand it. 

The loan that is provided under this category starts from Rs 50.000 to Rs 5,00,000. 

Prerequisites
  •  Last 6 months of account statements from an existing banker, if any.
  •  Balance sheet for the last 2 years.
  •  Income/sales tax returns.
  •  Estimated balance sheet for 1 year or for the duration of the loan.
  •  Memorandum and articles of association, if any.
  •  Sales made before filing the loan application and in the current FY
Tarun

Tarun Category is designed for businesses and enterprises that have completely established themselves and solidified their position in the market yet try to diversify and expand their business. Under this category, businesses could apply for loans ranging from Rs5,00,000 to Rs. 10,00,000. 

Prerequisites
  • All the requirements listed for Kishor Mudra Loan.
  • Address and Identity proof.
  • Caste certificate, if eligible for reservation

Advantages Of the MUDRA Scheme

  • the loan doesn’t require any collateral. It will save you further expenses and/or loss of a personal asset
  • For defaulters, the government takes the responsibility to repay the loan.
  • It is very beneficial to businesses that are looking to set up a micro-enterprise.
  • This loan will help you develop and further your company with up to Rs.10 lakh of funding.
  • The MUDRA Yojana scheme is available for small businesses regardless of the area.
  • Women borrowers get additional benefits as well as lower interest rates
  • It helps you raise funds easily to invest in your dream business
  • This loan also allows you to take advantage of the overdraft facility balance of up to Rs.5000.

With such a safe scheme and hassle-free process, MUDRA yojana has proved to be a godsend for all the entrepreneurs who are facing difficulty in raising funds for their business ventures. If You have an idea worth turning into reality, this might be the best option for you to hit your idea off the ground.