Mudra loan is a government-backed loan program designed to help small businesses and entrepreneurs access the financing they need to grow and expand their operations. Mudra loans have helped countless businesses across India to achieve their growth potential, and the program continues to be a vital source of funding for small businesses across the country.
What is the Pradhan Mantri Yojana Scheme?
The Pradhan Mantri Yojana Scheme is a flagship scheme of the Government of India that aims to provide financial assistance to small and marginal firms across the country.
The Mudra loan scheme was launched in 2015, where “mudra” is an acronym for Micro Units Development and Refine Agency. It primarily provides financial assistance to businesses in both the for-profit and nonprofit sectors.
Any qualifying business or person who applies for a mudra loan is entitled to get financial assistance up to a maximum of Rs. 10 lakhs.
The following companies are eligible for Mudra loan:
- RRBs (Railway recruitment boards)
- MFIs (Microfinance institutions)
- NBFCs (Non-banking financial corporations)
- Small finance banks
- Commercial banks
Industries Eligible to Apply for Mudra Loans
The Mudra loan is available to the following industries:
- Shop owners
- Food manufacturing sector
- Commercial vendors
- Small-scale producers
- Agricultural industry
- Repair and restoration businesses
- Self-employed business people
- service-based businesses
- vehicle owners
Salient Features of the Mudra Loan
The Mudra loan scheme is unique among the government’s loan schemes. Here’s why:
- The primary focus of the Mudra scheme is on supporting the manufacturing, trading, and service sectors.
- The Mudra loan’s proceeds can be utilised by the requesting business to meet its working capital needs.
- The mudra loan tenure ranges from 3-5 years, depending on the conditions at the time of processing.
- Existing and new companies can both apply for the PM Mudra loan.
- Businesses can use the money to finance the purchase of equipment, machinery, business expansion, business structuring, hiring of qualified personnel, additional working capital, and a variety of other things.
- The Mudra website and Mudra app have all the necessary tools and resources that anyone would need to apply online directly.
- The Mudra loan scheme offers three different products, each of which can be used for various purposes. This gives borrowers the flexibility they need to get the most out of the scheme.
- You don’t need to put up any extra security, like a deposit, when you take out this type of loan.
Benefits of Mudra Loan
Mudra Loan has helped many small businesses to grow and expand. The loan has also helped to create new jobs and generate income for many families.
The benefits of a Mudra Loan include the following:
1. Easy to obtain: The Mudra loan can be easily obtained from any government-authorised bank or financial institution. With a Mudra loan card, it is quite simple to withdraw the approved amount without going to the bank in person.
2. Lower interest rate: Comparatively speaking to other loan options, the Mudra Loan has a reduced interest rate. For the Mudra loan, the maximum monthly interest rate is 1%, which is fairly low.
3. Longer repayment tenure: The repayment tenure for Mudra Loan is longer, which gives small businesses more time to repay the loan.
4. Flexible repayment terms: The Mudra Loan has variable payback periods, allowing firms to select a schedule that works for them.
5. Helps create jobs: Mudra Loan has contributed in the creation of numerous new jobs and sources of income for families.
FAQs on Mudra Loan
Q.1: What does MUDRA mean?
The Indian government founded MUDRA (Micro Units Development and Refinance Agency Ltd) to provide financial help to microenterprises. The PM MUDRA loan aims to assist small businesses with financing facilities via several financial organizations, including banks and NBFCs.
Q.2: What is the maximum amount that can be borrowed under a MUDRA loan?
After submitting the relevant paperwork, you can acquire a maximum of Rs.10 lakh at a minimal interest rate.
Q.3: What is the complete procedure for applying for a Mudra Loan?
- To propose the Mudra Yojana business plan, contact the local public or private bank in your area.
- You need to submit a complete description of the plan.
- The bank will ask you to complete an application form.
- If the applicant already has a current account with a bank or is first-time entrepreneurship, the application will be processed swiftly.
Q.4: Can women get MUDRA loans easily?
MUDRA funding is available to women entrepreneurs as part of the government’s efforts to encourage female entrepreneurship. A MUDRA loan credit of up to Rs.10 lakh is available to female entrepreneurs who run non-farm businesses like manufacturing or service sectors.
Q.5: In India, are Digital Signature Certificates legally acceptable?
Yes, Digital Signature Certificates are legally recognized in India following the Information Technology Act 2000. Certifying Authorities issue Digital Signature Certificates. eMudhra offers Digital Signature Certificates online.