MUDRA Loan Explained: All About Pradhan Mantri Mudra Yojana Loan For MSMEs

MUDRA is a praiseworthy effort of the government to provide financial aid to the non-corporate and non-farming Micro and small enterprises across India. MUDRA stands for Micro Units Development & Refinance Agency, which is aimed to provide loans of up to Rs 10 lakh to the enterprises who are eligible with the help of the eligible enterprises through the Commercial Banks, RRBS, Cooperative Banks, NBFC, etc.

What Is The Structure Of Mudra Loan?

There is a very interesting observation that everybody will make once they go through the structure of this scheme. The names of these products are based on the various stages of the development of human life.  Human beings go through various stages of their lives such as childhood, adulthood, and old age. Similarly, an enterprise also goes through various phases of development, hence the name of the products; Shishu, Kishore, and Tarun. Let's acquaint ourselves with this structure briefly.

Shishu

This is that part of the structure which is specially designed for the enterprises in their nascent stages. All those enterprises who are in the process of establishing their business or thinking to start one can apply for a loan of up to Rs 50,000 under this product. 

Prerequisites

• Machinery quotation and other items to be purchased
• Details of the machinery to be purchased
• Details of the machinery supplier

Kishor

It is pretty easy to predict what kinds of businesses can apply for a loan under this category. Every child grows up to be an adult someday and so does a business. This category is designed for all those businesses that are already established but looking for fresh funds in order to expand it. 

The loan that is provided under this category starts from Rs 50.000 to Rs 5,00,000. 

Prerequisites

•  Last 6 months of account statements from an existing banker, if any.
•  Balance sheet for the last 2 years.
•  Income/sales tax returns.
•  Estimated balance sheet for 1 year or for the duration of the loan.
•  Memorandum and articles of association, if any.
•  Sales made before filing the loan application and in the current FY

Tarun

Tarun Category is designed for businesses and enterprises that have completely established themselves and solidified their position in the market yet try to diversify and expand their business. Under this category, businesses could apply for loans ranging from Rs5,00,000 to Rs. 10,00,000. 

Prerequisites

• All the requirements listed for Kishor Mudra Loan.
• Address and Identity proof.
• Caste certificate, if eligible for reservation

Advantages Of the MUDRA Scheme

• the loan doesn't require any collateral. It will save you further expenses and/or loss of a personal asset
• For defaulters, the government takes the responsibility to repay the loan.
• It is very beneficial to businesses that are looking to set up a micro-enterprise.
• This loan will help you develop and further your company with up to Rs.10 lakh of funding.
• The MUDRA Yojana scheme is available for small businesses regardless of the area.
• Women borrowers get additional benefits as well as lower interest rates
• It helps you raise funds easily to invest in your dream business
• This loan also allows you to take advantage of the overdraft facility balance of up to Rs.5000.

With such a safe scheme and hassle-free process, MUDRA yojana has proved to be a godsend for all the entrepreneurs who are facing difficulty in raising funds for their business ventures. If You have an idea worth turning into reality, this might be the best option for you to hit your idea off the ground.