What if i told you that you can avail low interest loans for your business without any collateral security easily ?
It sounds interesting right ?
Government Of India has launched a new scheme called the Pradhan Mantri Mudra Yojana via Mudra Bank (Micro Units Development and Refinance Agency Limited) a government organization aimed at providing financial assistance upto Rs 10 Lakhs for small businesses without the need of any collateral security.In this post i will show you how to get a loan easily under Mudra scheme for you business and also provide you valuable information on interest rates charged by banks for mudra schemes as well as what to do if banks dont issue you the loan.
The Mudra scheme offers 3 types of Loans
- Shishu: Loans upto Rs 50000 INR are offered under Shishu. This is mainly for Startup Businesses who are in their starting stages or businesses which require minimal funding.
- Kishor: Loans ranging from Rs 50000/- to Rs 500000/- (5 Lakhs) are offered under Kishor. This type of loan can be used by businesses to improve their existing operations and also for people who have availed shishu loan and who are in need of a larger finance can apply.
- Tarun: Loans covering above Rs 5 Lakhs to Rs 10 Lakhs are offered under Tarun. If eligibility conditions are met any Indian business entrepreneur can avail loan upto Rs 10 Lakhs.
Eligibilty for Applying Mudra loan
Any Indian citizen above the age of 18 who wants to Start or Expand his business can apply for Mudra Loan. Loans will be issued to only non farm sector income generating activity such as manufacturing, processing , trading or other service sectors. The types of small business segments that are eligible for mudra loan are listed below
- Partnership Firms
- Small manufacturing units
- Service Sector Units (Can include IT related services)
- Fruit & Vegetable Vendors
- Truck operators
- Food service units
- Small industries in rural and urban areas
Note: Women, SC, ST, OBC category people are given preference while providing loans.
Financial Institutions providing Mudra Loans
Presently Mudra Loans are offered by
- 27 Public Sector Banks
- 18 Private Sector Banks
- 31 Regional Rural Banks
- 14 Coperative Banks
- 47 MFI-NBFC
- 26 MFI
- 31 NBFI (Non Banking Financial Institutions)
Please click here to view the entire list of Financial Institutions offering Mudra Loans.
Process for applying Mudra Loans
1) The borrower first needs to approach the respective bank partnered under MUDRA scheme for availing the loan.If the borrower has an account in the bank the process of getting the loan will be faster.
2) The borrower needs to submit the Filled application form as well as the Business plan and other documents related to Mudra Scheme. The application form for Mudra Loan can be downloaded from here or can be collected from the respective bank office.
3) Once the Application Form and other documents are submitted, the loan will be sanctioned within a maximum period of 3 months.
Documents to be submitted along with Application Form
- Proof of identity – Self certified copy of Voter’s ID card / Driving License / PAN Card / Aadhar Card/Passport.
- Proof of Residence – Recent telephone bill, electricity bill, Voter’s ID card, Aadhar Card & Passport of Proprietor/Partners/Directors. (Any one of the listed proof is required to be submitted)
- Proof of SC/ST/OBC/Minority.
- Proof of Identity/Address of the Business Enterprise -Copies of relevant licenses/registration certificates/other documents pertaining to the ownership, identity and address of business unit.
- Applicant should not be defaulter in any Bank/Financial institution.
- Statement of accounts (for the last six months), from the existing banker, if any.
- Last two years balance sheets of the units along with income tax/sales tax return etc. (Applicable for all cases from Rs.2 Lacs and above).
- Projected balance sheets for one year in case of working capital limits and for the period of the loan in case of term loan (Applicable for all cases from Rs.2 Lacs and above).
- Sales achieved during the current financial year up to the date of submission of application.
- Project report (for the proposed project) containing details of technical & economic viability.
- Memorandum and articles of association of the company/Partnership Deed of Partners etc.
- In absence of third party guarantee, Asset & Liability statement from the borrower including Directors & Partners may be sought to know the net-worth. (The form will be provided by bank)
- Photos (two copies) of Proprietor/ Partners/ Directors.
- If business is functioning from a rented premises there needs to be a letter submitted to the bank mentioning that the owner of the premise permits keeping of machinery or other items purchased using the loan on the rented premise.
- Quotation of machinery/items to be purchased
Details to be filled in Application Form
- Enterprise name and category has to be mentioned for office use.
- Business information:
- Name of the enterprise
- Constitution , Need to Specify if it is proprietary, partnership firm, private limited firm, limited company or if it is any other firm
- Current business address
- Telephone and mobile number
- Business activity – Need to Select either existing or proposed.
- Date of commencement of business
- The registration number of the business – If Registered
- Registered office address
- Social category that is either SC, ST, OBC or Minority community. If it is a minority community, then it must be mentioned
- Information about the proprietor
- Date Of Birth
- Residential address
- Mobile number
- Academic qualification
- Experience in years
- ID proof and number
- Address proof and proof number
- PAN card or DIN number
- Relationship with the officials or director of the bank, if any
- Names of associate concerns and Associate Concerns
- Name of the associate concern
- Address of the associate concern
- Bank that the associate concern is associated with.
- Nature of the associate concern
- Extent of interest as a proprietor, partner, director or investor in the associate concern
- Existing banking or credit facilities
- Banking and Credit Facilities Existing
- Presently Banking With
- Limit availed
- Outstanding amount
- Security lodged
- Asset classification status
- Customer ID
- Credit Facilities Proposed: In this section the Amount , the purpose as well as the security offered need to be mentioned in rupees
- In case of working capital loans actual sales and projected sales needs to be mentioned.
- In case of term loans all fields needs to be filled in form
- Past Performance/ Future estimates needs to be mentioned , if new business only the future estimate need to be filled in
- Status regarding statuatory obligations fileds needs to be marked with releveant information concerning business
- The final part is you need to paste 3 paspport size photograph and provide the required signature at the needed section.
Once the filled application form and the required documents mentioned above are submitted to the concerned bank the bank will provide the borrower an acknowledgment slip consisting Date of application , Loan amount requested , application number , name of the applicant, signature of the applicant, and sign of concerned bank official.
Mudra Loan FAQ
Q1) How Long does the loan take to be granted once application form and other documents are submitted?
Ans) The loan can be sanctioned as early as within 2 weeks of submitting the application form to a maximum time frame of 4 months.
Q2) What will be the interest rates charged for Mudra Loans?
Ans) The interest rates are not fixed and will vary depending on the various banks.Mostly the interest rates charged will be between 9% to 12%.
Q3) What is Mudra Card?
Ans) Mudra Card is issued as a RuPay Debit Card and can be used to withdraw cash from any ATM and also make purchases via ecommerce sites and POS Machines.
Q4) What if a Bank does not give me a loan under PMMY Scheme?
Ans) You can submit your complaints or grievance concerning non issuing of loan to higher authorities in the lending institutions or can approach any other bank in your location.