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How to Apply for A Loan Under MUDRA Yojana?

Finance

To further boost the growth of the MSME sector and increase its involvement in the Indian economy, the government launched the MUDRA loan scheme in 2015. This plan offers credits to various organizations operating in the small and medium sector to help them meet varied business financial needs.

This loan is disbursed under the Pradhan Mantri MUDRA Yojana, in affiliation with leading financial institutions of India. Entrepreneurs can easily apply for this credit and receive its benefits. In this regard, they should educate themselves about the application process of the same.

How to apply for a MUDRA loan?

Here is a step-by-step guide on the online application process of this scheme –

Step 1: Visit the official website of the respective financial institution that you have selected to avail the loan from.

Step 2: Download the loan form.

Step 3: Fill it up with the required details.

Step 4: Submit this form along with other required documents to the lender.

Step 5: Following the verification and approval, you will get the loan amount.

You can also apply for this financing scheme offline through the lenders registered to provide this facility. You can visit their branch with a business plan and complete the due process to get the funds.

Being aware of the application process for the MUDRA loan facility is not enough, one needs to keep the required documents handy to complete this process without much hassle. Here is a list:

  • Properly filled MUDRA loan application form
  • KYC documents
  • Address proof
  • Business proof (registration certificate, trade licence, etc.)
  • Business plan

Even though these are essential details to be aware of, one should also know about the component of the MUDRA financing scheme to make an informed decision.

Components of MUDRA scheme

Here are the major components of the MUDRA loan scheme –

  • Shishu scheme– This component of the MUDRA scheme extends loans of up to Rs.50,000 to ventures starting their operations.
  • Kishore scheme– Here, companies that are already in operation and planning to upgrade or expand can avail of financial help of up to Rs.5 lakh.
  • Tarun scheme– Under this particular scheme, companies can get up to Rs.10 lakh. It is only available to the already established organizations that are planning to expand and diversify their portfolio.

Apart from these, other notable features of this financing schemes are –

  • The funds available here are collateral-free.
  • Even though every Indian entrepreneur is eligible for this scheme, but individuals with a payment default cannot avail of the benefits of this plan.
  • MUDRA credit comes with a dedicated payment card facility called ‘MUDRA card’. It is a debit card that allows borrowers a hassle-free way to withdraw funds.
  • Typically, loans under Shishu and Kishore scheme have no processing fees, but the Tarun scheme requires 0.5% processing charges.
  • The maximum tenor of any loans under this plan is a maximum of 36 months.
  • One can use the loan amount as a term loan and as an overdraft facility.

Apart from these, another point to note about this scheme is that it offers additional benefits to encourage female entrepreneurship in India. Under this initiative, MUDRA loan for women provided by leading financial institutions comes at a reduced interest rate.

MUDRA loans are undoubtedly a hassle-free way to secure funding for businesses, but it poses some challenges. For instance, the loan amount here is only limited to Rs.10 lakh, but in case a business owner needs additional funds, they can resort to alternative funding options like business loans.

Business loans – an alternative option

Specially curated for business owners to find necessary financial assistance, this credit instrument offers more diversity. Since this financial product has no restriction over its usage, one can use it to meet an array of financial requirements and keep a business financially healthy.

Moreover, the longer repayment tenor and flexibility in this process further increases the convenience of a borrower. This is further amplified by its quick approval. Usually, leading financiers like Bajaj Finserv approve a loan application within 24 hours, considering one meets all the eligibility parameters.

Also, the availability of pre-approved offers further expedites this process. These offers are available on financial products like business loans, personal loans, etc. Borrowers can quickly check their pre-approved offer by submitting their essential contact details.

The MSME sector of India comprises a vital part of the Indian economy; it contributes about 30% to this country’s GDP and 40% of the total exports. Also, this sector provides employment to around 110 million Indians.

The introduction of MUDRA loans has helped enterprises, especially the ones just starting their operations, to gather necessary funding. Moreover, different components of this scheme and the availability of online application further assists borrowers. However, the obvious shortcomings often make it difficult to use this scheme to one’s advantage. In such cases, applicants should also be aware of other government business loan schemes in India and their specifications to make an informed decision.

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