MUDRA Loan Eligibility – Beginner's Guide

Are you planning to start your own business venture or expand your existing enterprise? Perhaps you want to increase revenue. If yes, then meet your aide, who can help you progress and take the business in the direction you want to take it—PMMY (Pradhan Mantri MUDRA Yojana).

 

PMMY is an initiative by the Government of India that is specifically designed to empower the small, micro and medium enterprises in India to grow by giving them access to credit for their business expenses without any hassles. But before you dive straight into the Mudra Loan eligibility, it would help you to know what the MUDRA loan initiative is all about so that you can start your business on the right note.

 

What is PMMY?

 

PMMY, as mentioned earlier, is a government initiative launched in 2015 that provides microloans to aspiring business owners and small business enterprises in India. Under the MUDRA loan scheme, you can avail of a credit of any amount ranging from Rs. 1 Lakh to Rs. 10 Lakh to suit your business needs.

 

The MUDRA loan is available to you irrespective of the kind of business you own, be it manufacturing, trading, services or even allied agricultural activities. Since its launch, this initiative has been a complete game changer for all existing and aspiring business owners to take a step towards achieving their business goals.

 

In short, if you are a business owner, i.e., a handicraft items maker, a baker, or a farmer, applying for a MUDRA loan could be your golden ticket to finding success in your business.

 

Objectives of PMMY

 

The government of India launched the PMMY with some specific objectives, including –

 

• For establishing policy guidelines for financing small, micro and medium enterprises
• Get all the microfinance organisations and other related entities registered and layout rules and regulations for them to follow while extending the loan
• Help the small businesses grow and develop further

 

MUDRA Loan Eligibility

 

Just like any other type of loan, getting the MUDRA loan requires you to meet certain prerequisites. But, as a business owner, you would be pleased to know that one of the most significant features of PMMY is its inclusivity, meaning this type of loan is available for all businesses.

 

In addition, unlike traditional business loans, which have stringent requirements, MUDRA loans have simple eligibility so that anyone who needs the funds can get it. As a business owner, before you submit your loan application, here is a MUDRA loan eligibility check for you.

 

Any individual or a business entity can get a loan of up to Rs. 10 Lakh under the MUDRA loan scheme. You can get the loan under one of the following three categories:

 

Shishu (for starting a new business)

Under this category, you can obtain a loan of up to Rs. 50,000. The interest rate on this loan may vary from one lender to another, and the lender may decide based on your credit history.

 

Kishore (for expanding our current business venture)

Under this category, you can avail of a loan of any amount from Rs. 50,000 to Rs. 5 Lakh. Again, the interest rate may vary from one lender to another. However, most lenders offer loans under the MUDRA scheme at an affordable interest rate, allowing you to repay the amount easily.

 

Tarun (for taking business to the next level)

Under this category, you can avail yourself of Rs. 5 lakh to Rs. 10 lakh. If you have a good credit history, you may get the loan at a lower interest rate than others applying for the same loan amount.

 

Age Limit

You must be at least 18 years old to apply for a MUDRA loan

 

Location of the business

The MUDRA loan scheme is essentially for the benefit of the local small businesses in India. So, to get the funds under this scheme, your business must be located within the geographical boundaries of India.

 

Credit history

Although lenders in India prefer extending MUDRA loans to applications with a good and clean credit history, PMMY also recognised the potential even in applications with limited or not-so-strong credit history.

 

Documents required for PMMY loan

 

Just as it is important to know the eligibility requirements for a PMMY loan, it is equally critical to know about the MUDRA loan eligibility documents beforehand to keep them handy and avoid last-minute hassles.

 

Although the documents required may vary from one lender to another and based on the type of business enterprise you own, most lenders may require you to submit the following basic documents –

 

Identity Proof (you can submit any one of the following)

• PAN card
• Voter ID card
• Passport
• Driving license

 

Address Proof (you can submit any one of the following)

• Utility bill
• Bank account statement
• Aadhaar Card
• Voter ID card
• Passport

 

Business Plan

You must submit a detailed plan of how you want to run the business, its financial prospects, projections, etc

 

Project Report

A comprehensive plan on how you are planning to utilise the amount you borrow

 

Applying for a MUDRA loan – The Steps Involved

 

Now that you know the MUDRA loan eligibility and the documents required, it would also help you know the steps involved in applying for this loan. Most lenders like Udyog Plus have simple steps, allowing you to get the funds you want without any hassles.

 

• Visit the website of the lender that you want to approach for the loan
• Fill in the application form
• Submit the necessary documents
• Await the approval and get the disbursement

 

Final Word

 

MUDRA loan is a boon for all aspiring and existing business owners. So, take advantage of it and grow your business.