MSMEs are vital means of creating employment, lending and export opportunities in the Indian economy. However, despite their significant contribution to the economy, around 50% of these organisations do not have access to credit. This lack of access to cost-effective credit instruments restricts their business expansion.
Therefore, the Indian Government introduced Pradhan Mantri Mudra Yojana on 8th April 2015 to prevent these potential enterprises from ceasing their business operation due to lack of funding. Under this scheme, eligible entrepreneurs can obtain a sizeable Mudra loan of up to Rs. 10 lakhs to meet their business requirements. It is to be noted that the Indian Government offer a Mudra loan, but it is denoted as an ‘e-Mudra’. This is because you can apply for this loan online.
Now, if you operate a small enterprise and plan to avail of this scheme’s benefits, continue reading this article as it discusses its essential details in the upcoming segments.
What Is the Interest Rate of the e-Mudra Loan
The first thing that every aspiring loan borrowers seek in a loan is its interest rate. This is because an interest rate determines the borrowing cost. Similarly, before applying for an e-Mudra loan, you must check its interest rate. The interest rate charged upon it depends on your financial profile and business requirements. It also varies with each lending institution.
Besides an interest rate, a processing fee also adds up to the cost of borrowing a loan. You do not need to pay a processing fee for a loan amount of up to Rs. 50,000. However, the processing fee of 0.50% is applicable on a loan amount ranging from Rs. 50,001 and 10 Lakhs, alongside GST.
What Are the Eligibility Criteria to Qualify for a Mudra Loan
To qualify for a e-Mudra loan under the Pradhan Mantri Mudra Yojana, you must fulfil the eligibility criteria.
You must be an Indian citizen between 18 to 65 years and operate a non-farming or non-corporate MSME in an urban or rural area to avail the benefits of this e-Mudra loan.
For your convenience, listed below are a few occupations, and if you fall under any of these categories, you can apply for a Mudra loan:
- Small manufacturer
- Startup business owner
- Vegetable and fruit dealer
- Involved in agriculture
How to Apply for a Mudra Loan Online and Offline
Once you meet the eligibility criteria, you can apply for a Mudra loan under PMMY online and offline. Here are the following steps that you need to follow to apply for this scheme:
Steps to Apply Online
Step 1: Go to the official portal of the financial institution authorised to provide a Mudra loan under PMMY. Based on your requirement, you can apply for a loan under Shishu, Tarun, or the Kishore scheme under PMMY. Therefore, download an appropriate form, depending on your preference.
Step 2: Enter the personal details and information about your business venture. This includes providing your name, education qualification, etc.
Step 3: Now, submit the application form to the respective lending institution along with supporting documents.
Once the lender assesses and verifies the application form and attached document, it will disburse the loan amount to your bank account.
Step to Apply Offline
If you do not have access to the internet, you can apply for this loan offline as well. All you need to follow is the step-wise guide mentioned below for a hassle-free application process:
Step 1: Visit a financial institution or NBFC authorised under the PMMY to provide a Mudra loan.
Step 2: Fill in the Mudra loan application form with the correct information.
Step 3: Submit documents, passport-size photographs and duly filled application form to the lender.
Once the lender verifies the documents and application form, it will disburse the loan amount to your bank account.
Note that the maximum loan amount that a lender can sanction under this scheme is Rs 10 lakhs. However, if your organisation requires more funds to finance additional business requirements, you can avail a business loan from trusted lending institutions. These leading platforms allow you to compare the business loan interest rates offered by several reliable financial institutions and select a loan that suits your financial requirement.
To conclude, a e-Mudra loan is an effective government initiative to assist the potential MSMEs of India financially. However, if you cannot meet the eligibility criteria of this scheme or require more funding, you can resort to a business loan. Such credit instruments are available on leading online platforms against simple eligibility criteria.