what is MUDRA loan?

What is a Mudra Loan?

Small enterprises/businesses have a facility to apply for business loans under a special yojna known as Mudra loans. In this article, we will see what is a mudra loan? What are Loan schemes offered under Mudra Loan? What are documents required for the same? What are the eligibility criteria?

What is a Mudra Loan?

Mudra loan is provided under the Pradhan Mantri Mudra Yojana (pmmy) to nonfarming and non-corporate micro and small enterprise.

MUDRA Yojana is offered under 3 loan schemes, named Shishu, Kishor, and Tarun. Loans under the Mudra scheme are collateral/security free offered by financial institutions with the repayment tenure from 12 months to 5 years with flexible EMIs.

The Pradhan Mantri Yojana scheme was launched only to help Indian small-scale companies grow and reach penultimate success. This scheme was officially launched on 8th April 2015 and is dedicated to funding several such enterprises.

The name ‘mudra‘ is an abbreviation for Micro Units Development and Refine Agency and mainly helps companies from both, the profit as well as the non-profit sector with financing. 

Loan schemes Offered under Mudra loan

  1. Shishu Yojana ( covering loans upto Rs.50000)
    Micro and Small have the advantage as they can apply for loan upto Rs. 50000/-.This stage would cater to entrepreneurs who are either in their primitive stage or require lesser funds in order to get their businesses started.
  2. Kishor Yojana (covering loans upto Rs.500000/-)
    Kishor under the Mudra scheme is a category which is ideal for business owners who have an established business and are in pursuit of expanding it further. Applicants can seek loan amount that ranges from Rs. 50,000 – Rs. 5 lakhs. For buying equipment/machinery, raw materials, business expansion for existing enterprises these loans are very useful.
  3. Tarun Yojana (covering loans upto Rs 1000000/-)
    Loans from Rs. 500,001 to Rs. 10,00,000 (For established businesses and enterprises)  are offered under Tarun Loan Scheme. If an entrepreneur meets the required eligibility conditions, he/she could apply loan for upto Rs.10 lakhs. This would be the highest level of amount that an entrepreneur could apply for a startup loan.

Documents required for applying for loan under PMMY

For Shishu Yojana

  1. Quotation of all purchases including equipments and machinery.
  2. Details of machineries to be purchased.
  3. Details of suppliers who will provide machinery and equipments.

For Kishor Yojana

  1. Last six months bank statement from existing banker (if any).
  2. Last two years balance sheet .
  3. A report that will show technical along with economical sustainabilty of the business.
  4. Memorandum of Articles (MOA), (if any)
  5. Association of Articles (AOA) , (if any)
  6. Estimated Balance sheet for one year or for the period of Loan.
  7. Income/ sales return.
  8. Sales made before applying for the loan.

For Tarun Yojana

  1. Last six months bank statement from existing banker (if any).
  2. Last two years balance sheet .
  3. A report that will show technical along with economical sustainabilty of the business.
  4. Memorandum of Articles (MOA), (if any)
  5. Association of Articles (AOA) , (if any)
  6. Estimated Balance sheet for one year or for the period of Loan.
  7. Income/ sales return.
  8. Sales made before applying for the loan.
  9. Identity Proof such as PAN card , Aadhar Card, Voter’s card , Driving license etc.
  10. Address Proof as on Passport ,Aadhaar card etc.
  11. Certificate of SC, OBC ,ST, OC etc.

Eligibility for Applying For loan under PMMY

MSME’s in both, rural and urban areas of India can apply for the Mudra loan only if they meet the following mentioned criteria;

Eligibility StatusCriteria
Age Limit18 years – 65 years
Amount of LoanShishu Yojana – Up to Rs. 50,000
Kishor Yojana – Rs. 50,000 – Rs. 5,00,000
Tarun Yojana – Rs. Up to 10 Lakh
Type of IndustryIndividual occupied in agriculture, fruit and vegetable vendor, Craftsmen, small-scale manufacturer, store owner.
Company StatusShishu – New company commencement.
Kishor & Tarun – Expansion of the existing company.
Tenure of Loan3 years – 5 years

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