Finance plays a vital role in the growth and development of any business, whether large or small. However, it is not easy for small businesses to obtain finance. One of the biggest challenges faced by Small Medium Enterprises (SMEs) is the lack of financial support from the formal banking or financial sector. It not only hampers their growth but also makes them inefficient to compete with large players. Realising this bottleneck, the Government of India has made efforts to provide easy access to micro units or entrepreneurs for finance. Thanks to leading NBFCs such as Bajaj Finserv, obtaining a small and medium enterprise (SME) loan is now easy and effortless and firms can now aspire to scale up and grow their operations efficiently without worrying of the capital.
The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of the Government of India designed to bring micro and small enterprises into the formal financial system. This scheme aims to extend affordable credit to micro and small units engaged in manufacturing, trading or services activities. The scheme also extends to small enterprises involved in allied agricultural activities.
The honourable Finance Minister announced the PMMY scheme during the 2016 Budget. Under the scheme, micro and small units and entrepreneurs in India can apply for Pradhan Mantri Mudra Loan under three plans namely, ‘Shishu’, ‘Kishor’ and ‘Tarun’ depending on the stage of growth and funding needs.
In this article, we will learn about the Mudra loan eligibility criteria and how to apply for Mudra loan.
Mudra loan eligibility criteria
To avail the Mudra loan, you have to be eligible to apply for it. The eligibility criteria are as follows:
The applicant must be an Indian citizen.
The applicant must have a business plan to conduct non-farm sector income-generating activities such as manufacturing, processing, trading or services.
The applicant’s credit requirements must be less than Rs. 10 lakh.
The applicant must be from the non-corporate small business segment such as proprietorship, partnership firms, shopkeepers, service sector units, small manufacturing units, food-service units, fruit or vegetable vendors, truck operators, small industries, machine operators, repair shops, food processors and others industries in urban and rural areas.
However, if you’re looking for high-value financing along with longer tenure, you can opt for a Business Loan from Bajaj Finserv offering funds up to Rs.30 lakh. With high amount of funds at nominal interest rates, easy to meet eligibility criteria, and a convenient repayment tenor ranging from 12-60 months, these loans are specially designed for micro, small and medium enterprises. You can get the loan by submitting just 2 documents and without pledging any collateral.
Moreover, Bajaj Finserv provides instant approval with pre-approved offers on business loans and a host of other financial products. These pre-approved offers save your valuable time and simplify the process of availing finance. By entering just some basic details like mobile number and email ID, you can know your pre-approved offer.
Process of availing Mudra loan under PMMY
Let’s go through the step-by-step process to avail the Mudra loan.
First, visit a bank or a financial institution providing the Mudra loan.
Next, you have to fill in the application form. You need to fill in details like the enterprise name, details of the proprietor and business, details of associate concerns, details regarding banking and credit facilities, past and future estimates of profit, sales and capital. Fill in the form with utmost care and ensure that all the details are correct.
Along with the loan application form, you have to present your business idea. Your business plan must ensure the growth of your business and economy as a whole.
Next, you have to submit documents such as:
Identity proof – Aadhaar card, PAN card, driving license, passport, etc.
Residential proof – electricity bill, telephone bill, property tax receipt, etc.
Proof of business – business license, tax registration, etc.
Details of the machinery or other items to be purchased – price, the name of the supplier, etc.
Once you submit all the documents, the bank or financial institution will process your Mudra loan application as per their terms and conditions.
After the application is accepted and sanctioned, you will receive a Mudra Card from the lender.
You will receive the Mudra loan in the form of a Mudra card. With this card, you can avail credit conveniently. It offers working capital through Cash Credit or Over Draft. You can use it as a RuPay Debit Card to withdraw cash from the ATM or to make purchases using Point of Sale machines. Moreover, if you have surplus funds, you can repay the loan amount and reduce your interest burden. You can approach any bank or financial institution to get a Pradhan Mantri Mudra Loan.