In 2006, in agreement with the Micro, Small, and Medium Enterprises Development (MSMED) Act, the Government of India has introduced MSME or Micro, Small, and Medium Enterprises. For the Indian economy, MSMEs are an important sector as they immensely contributed to the country’s socio-economic development.
It does not only work hand-in-hand towards the development of the nation’s rural areas but also under ‘Atma Nirbhar Bharat Abhiyan’ Scheme of 2020 by the Government of India has given a new definition for MSMEs and also provide large employment opportunities at lower capital cost than large industries
About Pradhan Mantri MUDRA Yojana (PMMY)
On the 8th of April 2015, the Honourable Prime Minister launched a scheme called Pradhan Mantri MUDRA Yojana (PMMY) for providing loans up to 10 lakh to the non-corporate, non-farm small/micro-enterprises.
The primary aim is to fund the under-funded through the concept of low-cost credit.
Micro or small businesses in the manufacturing, service, or trading sector can avail of this loan and there are three types of MUDRA loans based on business.
Types of MUDRA Loans
|Shishu plan||For start-ups and new businesses loans up to Rs. 50,000 can be availed under the Mudra Shishu Loan scheme.|
|Kishor plan||For buying pieces of equipment, new machinery or raw materials existing enterprises can get loans ranging from Rs. 50,001 to Rs. 5,00,000 under the Kishor Loan Scheme.|
|Tarun plan||For established businesses and enterprises loans ranging from Rs. 500,001 to Rs. 10,00,000 are available under Tarun Loan Scheme.|
Preparation and documents for PMMY loan
To apply for any loan, groundwork is important, and before you approach the bank that is providing the loan keep all required documents ready with full preparation.
- Business Plan: Keep ready, a self-written business plan to submit with loan application.
- Duly filled application with 2 recent Passport-sized photographs( always carry extra copies of your photographs)
- KYC documents of Applicant and Co-applicants- Passport, Voter’s ID card, Aadhar Card, Driving License, PAN card, Utility Bills (Water/Electricity Bills)
- Copy of Last 6 months’ bank statement.
- Proof of belonging to a special category, such as SC, ST, OBC, Minority, etc. (if applicable)
- Business address and tenure proof, if applicable.
Do cross-check with your bank for other required documents required to be submitted,
Benefits and Features of PMMY Loan
The MUDRA Yojana has multiple benefits and advantages over other MSME financing schemes in the market, I list a few below to understand it better:
- The scheme offers very affordable and reasonable interest rates, approximately 8.40–12.45%.
- This MUDRA Yojana scheme is available for small businesses in both urban and rural areas.
- You can use this loan to fund, develop and expand your company with up to Rs.10 lakh funding.
- Being part of the Pradhan Mantri Jan-Dhan Yojana, this loan also allows you to take advantage of the overdraft facility balance of up to Rs.5000.
- They fix the repayment tenure for this loan based on your cash flow capacity and the declared assets and you can also avail refinance from MUDRA for a maximum of 36 months.
- Women borrowers can get better benefits because of lesser interest rates.
As I spoke about, women borrowers let me share little details about Mudra Loan for Women.
What is MUDRA Loan for Women and its features?
The government of India has introduced a unique loan scheme for women entrepreneurs, called the Mudra Yojana scheme for women under the Pradhan Mantri Mudra Yojana scheme.
They also termed this loan as Mahila Udhyami Yojana, which provides loans up to Rs 10 lakh to women entrepreneurs with low interest and with no collateral, and flexible repayment tenure. Various banks, financial institutions, and microfinance institutions provide loans under the MUDRA scheme
Eligibility for Pradhan Mantri MUDRA Yojana (PMMY) Loan for Women
- The age limit for women who can avail of loans under the Mudra scheme is minimum 18 years to 65 years.
- Women those wish to set up a new business, expand an existing business or modernize existing business with the latest technology and tools can avail this loan.
- Total tenure for loan repayment for women is a minimum of 3 years and a maximum of 5 years.
- They require a written business plan to be submitted, for availing business loan for women.
- There shouldn’t have defaulted on any previous loan.
Sectors which Pradhan Mantri MUDRA Yojana (PMMY) scheme supports
If you have a business plan and looking for financial support, the loan MUDRA scheme is best to be availed and check out the sectors which they support:
- Service Sectors:
d) Photocopy shops
e) Salons and more
- Agri Sectors:
e) Agro Business and more
c) Auto Rickshaws
d) Goods transports and more
According to the reports MSME contributed around 30% to the country’s GDP, and there are such huge numbers they’re vital to our economy. To support MSME this MUDRA Yojana is a great way to boost our country’s talent and economy and eventually, it will generate more job opportunities.
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Also read: Term loan for Chartered Accountants
© Ruchi Verma
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