Mr. Narendra Modi, the Prime Minister of India, launched the Pradhan Mantri MUDRA Yojana on 8th April 2015 and MUDRA (Micro Units Development and Refinance Agency Ltd.) loan scheme comes under this. It’s a big effort to help MSMEs. This government scheme’s main target is to finance the small, high-risk businesses. MSMEs, non-farm sectors and non-corporate sectors can avail up to 10 lakhs through this scheme. And to borrow a MUDRA loan, an applicant can approach any lending institution, such as MFIs, Co-operative banks, Commercial Banks, RRBs, Small Finance Banks, and NBFCs like Indifi. Moreover, you can apply online through these platforms.
You must have a rock-solid business strategy to borrow a MUDRA loan. This loan cannot be taken out for any personal need like purchasing a vehicle or even in case you are a rich business person. Under following cases, a business owner can take out MUDRA loan:
Why To Take Mudra Loan?
- Workplace renovation
- Overdraft facility
- Agriculture-related activities
- Buying equipment and other resources
- Buying commercial vehicles
- Dropline overdraft
The Businesses Which Can Avail The MUDRA Loan Include:
- Service sector companies
- Micro-manufacturing companies
- Micro industries
- Vendors (fruits and veggies)
- Repairing stores
- Foodservice businesses
- Truck owners
Also Read: Business Loan Vs. The Line Of Credit
What Are The Documents Needed For Availing The MUDRA Loan
- Proof of business address
- Evidence of business identity
- Passport size photographs
- Equipment and other product quotations
- Residential evidence
- Proof of business owner’s identity
How To Apply For The MUDRA Loan Online
You can apply online for the MUDRA loan by visiting its or registered bank or any NBFC’s official website. The online form is available on the website. You just need to fill the application form, be it for the Shishu loan, Tarun loan, or Kishor loan. First, download the application form. Applying for the MUDRA loan online is really convenient as this avoids all the hassles of visiting the lender personally, waiting in the queue, and then borrowing the loan application form. Here are steps to follow to apply for the MUDRA loan online:
- Choose the lending institution.
- Download the application form.
- Fill all the details precisely.
- Upload all required documents.
- Finish all formalities by the lending institution.
- Get the loan approved after this procedure is done.
Types Of MUDRA Loan Available For Small Businesses
Based on the pace of development and growth stage of a business, alongside the financial requirement, these 3 types of MUDRA loans are provided:
1. Shishu loan
Under this scheme, you can borrow up to INR 50,000. This loan is available for people who need lesser finances. It is provided to start-up companies who require funds.
2. Kishor loan
Under this scheme, you can borrow a loan between INR 50,000 and INR 5 lakhs. This loan is perfect for applicants who already have an existing business but require more funds for development. The rate of interest depends on the lender. Personal credit is important for this loan for deciding the interest rate. The lender also decides the payback period.
3. Tarun loan
Under this scheme, you can borrow a loan from INR 5 lakhs to INR 10 lakhs. This loan provides the highest amount considered to businesses under the MUDRA scheme. It is offered to businesses which are already established but require funds for maximization. The credit history is important in deciding the payback duration and rate of interest.
What Is The Repayment Tenure for MUDRA Loan
Applicants will get the loan amount for the duration of 5 years. He/she can pay the lender through installments. The installment process is easy as rates of interest are low. Hence, a MUDRA loan helps small businesses to develop without putting much pressure and hassles to their regular routine and funds.
In case you are seeking a higher amount of funds with an easy borrowing encounter, choose a business loan from Indifi which is particularly crafted for your SME. We offer custom solutions to clients to ease the application procedure and access to immediate business finances.