Pradhan Mantri Mudra Yojana is a scheme initiated by the Micro Units Development and Refinance Agency that aims to provide financing for micro and small industries. These industries are mainly comprised of non-corporate, non-farming areas of the market. Due to lack of proper financing from the corporate sector, such business had to rely on smaller loans from private lenders. This scheme initiated by the government basically allows micro units to avail loans if their credit requirement is lesser than INR 10 lakhs.
The loans offered under Pradhan Mantri Mudra Yojana, as per the discretion of MUDRA (Micro Units Development and Refinance Agency) have been categorised into three classes. Each type of loan under this facility has a different limit of financing available and is meant for specific firms or trade bodies that are in specific stages of growth. Any business either in its nascent stage, mid-growth or in the final stages of achieving financial independence can apply for the loans that seem fit to them. The categories of loans are as follows –
As with every business loan, the MUDRA loan also necessitates that you have a business plan and that should be presented along with your application for the loan. It is a good idea to draft out the business plan, taking into account the finances needed, projected business model, expected turnover and contingency plans. You could seek the help of a business analyst or even an accountant to help you with drafting the business plan. As a barebones concept, your business plan should include the nature of the business, the members involved and the source of funding, if applicable. The following needs to be carried out sequentially in order to apply for any variant of the loan –
The interested borrower needs to approach an approved Public Sector or Private Sector bank closest to his/her location
Along with the business plan or idea, one needs to present the application form and the documents required will be –
The bank will provide instructions to fill out separate forms and they would need to be duly filled
In case all details provided by the borrower are given a green by the bank, the loan will be approved and sanctioned
The Pradhan Mantri Mudra Yojana is a scheme started by a government initiative and the rules and regulations are controlled by a government. The interest rates on offer from banks under this scheme could range from as low as 11.2 percent to as high as 37% per annum. The interest rates are dependent upon the banks that offer such loans.