Published on March 19, 2020
The startup ecosystem in India has flourished massively in recent years. Digitization, technological advancements and creative ideas from individuals across the country have led to the establishment of numerous startups. These startups not only generate employment opportunities but also contribute massively to the country’s economic growth. Since India is a young nation, and is adapting to latest trend and technologies at a rapid pace, it would be safe to assume that the future of startups in India seems to be brighter than ever before. However, there are certain factors that hinder the growth and expansion of startups. Lack of funds is one such reason that has led to the collapse of numerous startups across the country. To tackle this issue, the Indian Government has come up with the Pradhan Mantri Mudra Yojana (PMMY). The objective of this scheme is to provide adequate funds to the startups so that they can survive in the competitive market and gradually grow and expand.
Let us have a look at the details of the Pradhan Mantri Mudra Yojana (PMMY)
Micro-Units Development and Refinance Agency (MUDRA) is a Government established organization that aims to provide financial assistance to small businesses. Under the Pradhan Mantri Mudra Yojana, small businesses can avail a collateral-free loan of up to Rs. 10 lakhs. MUDRA loans are divided into three categories:
MUDRA loans are approved and disbursed by public and private sector banks, NBFCs, rural banks, and co-operative societies. The major advantage of availing a MUDRA loan is that lenders do not charge any processing fees or application fees for the same. Also, the credit score of the applicant doesn’t matter while availing the MUDRA loan. The repayment tenure of MUDRA loan usually ranges from 3 years to 5 years.
Let us have a quick look at the process to apply for MUDRA loan
MUDRA loan application process
Documents required for MUDRA loan
Before you start with the MUDRA loan application process, make sure that you have all the required documents available with you. This will help you avoid any inconvenience in the later stage. The necessary documents for MUDRA loan apply process are mentioned below:
MUDRA loan eligibility
Before applying for MUDRA loan, you must ensure to check MUDRA loan eligibility. This will reduce the rejection chances of your loan application. All small businesses are eligible for the Pradhan Mantri Mudra Yojana. Also, it is necessary that the beneficiaries should not have defaulted repayment of earlier loans taken from any lender to be eligible for MUDRA loans.
Mudra loans can be availed by non-corporate, non-farming micro, small and medium enterprises (MSMEs) in rural as well as urban India. You are eligible for PMMY scheme if you are:
You can easily apply for a MUDRA loan with the help of leading banks and other financial institutions registered under the PMMY scheme. MUDRA loan can help you avail the much-needed funds required for the expansion of your small business. Make sure that you know the exact business purpose behind availing the MUDRA loan. This will help you make the most of the loan amount you receive.
Now that you have a better understanding of various details of the MUDRA loan, ensure that you make optimum use of this scheme for the growth and expansion of your business. You must also research the financial institution carefully before applying for a MUDRA loan with it. Settle for a financial institution that is reliable and has good customer service. Also, go through the terms and conditions of the loan agreement carefully before making the final decision. In case of any query, you must not hesitate in seeking the help of a financial advisor. This can help you avoid any inconvenience in the later stage.