How to Get a MUDRA Loan? Your Complete Guide

On April 8, 2015, the Prime minister of India launched the Pradhan Mantri MUDRA Yojana.

The PMMY scheme is aimed at non-corporate and non-farm small/micro enterprises. The goal is to create an ecosystem of growth for micro and small enterprises sector.

Why Did The Government Set Up Pradhan Mantri MUDRA Yojana?

Most of India’s income comes from agriculture. The second biggest sector is the Non-Corporate Small Business Sector (NCSBS).

The biggest challenge NCSBS face is the lack of access to capital to grow the business.

Traditionally, banks lend to businesses. However, banks typically do not serve very small or risky micro-enterprises.

To ensure that small businesses thrive, the government introduced the PMMY scheme to support them financially.

The Three Flavours of Mudra Loan

Micro Units Development & Refinance Agency Ltd (MUDRA) scheme offers three loans:

Loan	Max Loan Amount
Shishu	Rs 50,000
Kishore	Rs 5 Lakhs
Tarun	Rs 10 Lakhs

All of these loans are collateral-free.

Depending upon your financial needs and eligibility, you can apply for one of these loans.

MUDRA Loan Eligibility

MUDRA loans are designed for shopkeepers, vendors, traders, and other service sector activities.

You can get a loan for:

• Running day-to-day activities (working capital)
• Buying commercial equipment for micro-units
• Vehicle loan for commercial purposes, including two-wheelers, tractors, and tillers.
• Agri-allied and non-farm activities that generate income. E.g., poultry, beekeeping, etc.

How to Apply for a MUDRA Loan?

#1: Apply for Shishu Under PMMY

Overview:

• Maximum Loan Amount: Rs 50,000
• Repayment Period: Up to 5 years
• Collateral: Not required
• Processing Fee: Zero
• Interest Rate: 8.5% – 12% (Depending on the bank)

Documents Required:

• Self-Attested ID proof
• Address proof
• Recent photograph (two copies)
• Quotation of Machinery/commercial items you need to purchase
• Details of machinery/ supplier and items to be purchased.
• License/Registration certificate for your business
• Address proof of your business
• If applicable, proof of category like SC/ST/OBC/Minority, etc.

Where to apply?

You can walk into any bank that offers MUDRA loans or apply online here.

#2: Apply for Kishore Under PMMY

Overview:

• Maximum Loan Amount: Rs 5,00,000
• Repayment Period: Up to 5 years
• Collateral: Not required
• Processing Fee: 0 – 0.5% + taxes (Depending upon the institution)
• Interest Rate: 8.5% – 12.5% (Depending on the bank)

Documents Required:

• Self-Attested ID proof
• Address proof
• SC/ST/OBC/Minority proof
• Recent photograph (two copies) of all directors/partners
• License/Registration certificate for your business
• Address proof of your business
• If any, statement of accounts from your existing banker
• For loans > Rs 2 Lakhs, the last two years balance sheets along with income tax/sales tax return filed
• For loans > Rs 2 Lakhs, projected balance sheets for a year (working capital limits) or for the period of the loan (term loan)
• Current financial year sales
• If you plan to set up a new business, you’ll need a project report that states the technical & economic viability of the business
• Business registration documents – Memorandum and articles of association of the company, partnership deed, etc.
• Asset & Liability statement from the Directors/Partners in the absence of a third-party guarantee.

Where to apply?

You can walk into any bank that offers MUDRA loans or apply online here.

Pro Tip: In addition to udyamimitra, for loans up to Rs 1 lakh, you can apply online through SBI.

#3: Apply for Tarun Under PMMY

Overview:

• Maximum Loan Amount: Rs 10,00,000
• Repayment Period: Up to 5 years
• Collateral: Not required
• Processing Fee: 0 – 0.5% + taxes (Depending upon the institution)
• Interest Rate: 8.5% – 12.5% (Depending on the bank)

Documents Required: Same as Kishore.

Where to apply?

You can walk into any bank that offers MUDRA loans or apply online here.

MUDRA Card

MUDRA Card is a RuPay debit card that’s issued against your MUDRA loan account.

Using your debit card, you can withdraw the amount required for your working capital. This keeps the interest rate low as you are charged only on the utilized amount.

The MUDRA card is also helpful to increase your credit score. This enables you to get bigger loans from banks at a later date.

You can use the card to withdraw cash from ATM or swipe at any store that accepts RuPay cards.

FAQs