Small business owners often face financial difficulties when they want to expand their operations or invest in their businesses. The PM Mudra Loan Scheme is a government initiative aimed at providing credit support to small traders, entrepreneurs and other eligible businesses.
One of the major features highlighted under the scheme is that borrowers do not need to provide a guarantee or collateral for the loan. The available loan amount depends on the category under which the applicant applies.
Four Categories of Mudra Loans
Loans under the PM Mudra Scheme are divided into four categories according to the amount required by the applicant.
Under the Shishu Mudra Loan, applicants can get a loan of up to ₹50,000. The Kishore Mudra Loan covers amounts above ₹50,000 and up to ₹5 lakh.
The Tarun Mudra Loan is available for loan requirements ranging from ₹5 lakh to ₹10 lakh. Meanwhile, the Tarun Plus Mudra Loan covers loans from ₹10 lakh to ₹20 lakh.
This classification allows applicants to select the loan category according to their business requirements.
Who Can Apply for a Mudra Loan?
The scheme is intended for a wide range of small businesses and entrepreneurs. Small traders, shopkeepers, home-based business owners, farmers, artisans, startups, women entrepreneurs and street vendors can apply.
Small manufacturers, MSMEs and people involved in animal husbandry activities are also among those who can seek credit under the scheme, subject to the applicable conditions.
How to Apply for a Mudra Loan
Applicants can apply for a Mudra loan either offline or online. For an offline application, the applicant needs to approach a nearby bank branch or an NBFC offering Mudra loans. The application form has to be completed and submitted along with the required documents.
For online applications, applicants need to visit the official portal, register themselves and complete the loan application. After uploading the required documents, they can select the bank or NBFC from which they want to obtain the loan and submit the application.
Once the application is submitted, the selected lender contacts the applicant to proceed with the next stages of the process. The application form for the Shishu category is different, while the forms for Kishore and Tarun are the same.
Documents Required and Loan Processing Time
Applicants need to provide the necessary KYC and supporting documents while applying. These may include a passport, voter ID, driving licence or PAN card. The PAN card and Aadhaar card are essential documents mentioned for the application process.
Applicants belonging to SC, ST or OBC categories are required to provide the relevant caste certificate. A bank account statement covering the previous six months also needs to be submitted.
Depending on the nature of the business, proof of the business’s age and operational history may also be required. However, these documents are not applicable to every applicant.
After submitting the application, the loan processing generally takes around 7 to 15 days, although the process may take longer in some cases.
The PM Mudra Scheme itself does not prescribe a single interest rate for all loans. The applicable interest rate is decided by the bank or lending institution providing the loan.