Introduction to Mudra Loans

The full form of MUDRA is Micro Units Development & Refinance Agency Limited. MUDRA is an institution, which is developed by the Government of India for developing, and refinancing activities associated with micro units.

Mudra loans have been set up in India as a subsidiary of SIDBI just to lend financial assistance to entrepreneurs, who are involved in small businesses. In the Budget of 2016, an announcement was made about MUDRA by the Finance Minister of India. The Mudra loans consist of three schemes, such as 'Shishu', 'Kishor' and 'Tarun' for signifying the growth's stage and funding requirements of the beneficiary micro unit.

Mudra loans would be offered to every financier or financial institution, associated with co-operative societies, small businesses, small banks, and so on. The Mudra loans are offered to people under three schemes present in the Pradhan Mantri MUDRA Yojana (PMMY). These are as listed below:

  • Shishu: In this loan, you can get a loan of about 50, 0000
  • Kishor: In the second type of loan, business owners can get loans more than 50, 000 up to 5 Lakhs.
  • Tarun: In the third kind of loan, the loans of at least 5 Lakhs to 10 Lakhs are provided to people.

Who Can Apply for Mudra Loans?

Mudra loans are significant for entrepreneurs to run their small business successfully.

However, you must check the eligibility criteria before applying for Mudra loans:

  • Only Indian citizens with a business plan for a business of non-farm nature that can generate income can apply for a Mudra loan.
  • Your income-generating activities including trading, manufacturing, processing or service sector can make you eligible to take Mudra loans from MFI, bank or NBFC, financial institutions, and primary lending institutions. However, the income accumulated from your business should be lower than 10 Lakhs.
  • The terms & conditions can differ on the distinct loans you choose under Mudra
  • You can apply for Mudra loans if you have partnership or proprietorship firms running a small scale manufacturing unit.
  • The applicant can be an artisan
  • The vendors of fruits or vegetables, shopkeepers, food-service units, truck operators, machine operators, repair shops, food processors, and so on can take Mudra loans.
  • The Shishu loan can be applied by the business owners of the startup business only
  • Those businesses that have started their business operations and require financial support to establish their company, they can apply for Kishor loan.
  • Tarun loan can be applied by businesses, which are established, however, need funds for expansion purposes.

How to Apply for Mudra Loans?

You have to do the following steps to apply for Mudra loans:

  • You have to think of the banks or any other financial institution from where you can get the Mudra loan.
  • You have to know what documents you have to offer to the bank or financial organisation from where you can apply for Mudra loans.
  • You must have a business plan for your company after you know which bank offers Mudra loans and also gather all the significant documents to get the loan.
  • Determine the category in which your business falls so that you can get a Shishu or Kishor or Tarun loan.
  • Get the loan application form of Mudra loan from your preferred bank or any financial organisation. Just mention the loan category so that you receive the correct application form.
  • You should fill the application form with caution and then attach all the required documents with this form at the time of submission.
  • Your chosen bank would do verification of all your documents and if every eligible criterion is met, you will be approved to get Mudra loan to make progress in your small business.
  • After the application procedure gets over, the bank would issue a MUDRA card to you. This card will consist of the sanctioned loan amount and it would work as your debit card. You can utilize your MUDRA card for withdrawing cash from any ATM or you can use it on any purchase at POS terminals.

How to Apply for Mudra Loans through MyMoneyMantra?

You can also apply for Mudra loan through MyMoneyMantra. Just follow the steps mentioned below:

  • You have to log in to the website of MyMoneyMantra, and then select the type of Business Loan from the list in their dropdown menu. Just choose the lender through whom you want to apply for the Mudra loan among the options available.
  • You have to fill every detail correctly that is needed to apply for Mudra loans
  • After the application procedure is completed, the representatives of MyMoneyMantra would contact you. They can guide you in the entire documentation process until your loan is approved.

Why Apply for Mudra Loans through MyMoneyMantra?

It is difficult to get a loan for your business enterprise if you are a beginner in the business world and in the matter of taking loans from banks or other financial institutions. It is significant to do extensive market research before you finally decide to take a business loan from the available offers in the market. The gathering of data from a wide range of banks or financial organizations would be a daunting task if you decide to do it on your own.

However, you do not have to do any time-consuming task to apply for Mudra loans or a Business Loan anymore. MyMoneyMantra is the best solution to meet all your financial requirements as it collects data and puts all information together on the screen for your better understanding.

Just before choosing any bank's loan for doing financing of the business operations, comparison of loan offers between two or more banks is significant. MyMoneyMantra makes this tedious task of comparison easier. You can use MyMoneyMantra to compare data of loans and other financial products on its website. After that, you have to select the lender and apply for a Business Loan via MyMoneyMantra so that you can apply for a loan at ease and quickly.

After the application process of your preferred loan is completed, the representatives of MyMoneyMantra would handle all other processes. The documentation process is a vital task and the representatives would take care of everything up till loan approval.

Top Public and Private Sector Banks Offering Mudra Loans

The top public and private sector banks offering Mudra loans to people are given as follows:

Private sector banks Public sector banks

HDFC Bank

State Bank of India

IndusInd Bank

Canara Bank

Axis Bank

Bank of India

ICICI Bank

UCO Bank

Ratnakar Bank

Indian Bank

Yes Bank

Syndicate Bank

KarurVysya Bank

Bank of Baroda

Lakshmi Vilas Bank

Punjab National Bank

South Indian Bank

Allahabad Bank

Karnataka Bank

Central Bank of India

Just before applying for Mudra loans from any of the bank mentioned above, just check the eligibility requirements, documents, and terms & conditions that a borrower has to follow. You can contact the bank representatives to clear your doubts.

Documents That Must Accompany Your Mudra Loan Application

The documents that are needed to get Mudra loans are given as follows:

  • To prove your identity, you would need to have PAN card, Aadhaar card, passport, driver's license, etc. You have to give the documents proving your identity in a self-attested form.
  • The self-attested documents needed as an address proof are electricity bill or telephone bill or property tax receipt.
  • The applicant has to give a recent photograph, which should be lower than 6 months old. In addition, you have to submit two colored passport photographs that are clicked recently.
  • You have to provide a quotation of machinery for your company or other items that are going to be purchased.
  • You have to inform the name of every supplier or prices of machinery or information about machinery.
  • You need to disclose information about your business assets and business liability
  • The sales tax returns, balance sheet, IT returns for the last 3 years should be provided. These documents are required if you want to want to get Shishu loan or Kishor loan or Tarun loan.
  • You have to submit the copy of the rental agreement if your business premise is operating in a rented place.
  • If you have a partnership firm, you have to submit your Partnership deed
  • You may need to submit Articles of Association; however, it depends on the nature of your company.
  • You have to provide proof that you belong to a minority group or you are from a community of SC or ST, BC.
  • If the working capital of your enterprise has been limited, you have to provide documents for it
  • If any term loan is present on a borrower's business name, they have to submit the projection of 2 years of their business balance sheet.

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