If you’ve heard of Mudra schemes but aren’t exactly sure what they are, you’re not alone. They are a series of financial support programs introduced by the Indian government to help small businesses flourish and grow. The name ‘Mudra’ comes from the word “micro-credit”, which refers to giving small loans to people who cannot qualify for traditional bank loans because of their lack of fixed assets or income verification. In this article, we will guide you about how you can get a mudra loan and other important details related to it.
What is a Mudra loan?
A Mudra loan is a business loan given by banks and financial institutions to small businesses or start-ups that cannot qualify for a traditional bank loan. The government guarantees the loan so banks have less risk. Now Mudra loans are available not just to start-up businesses but also to existing businesses. The scheme was named after the concept of “seal” or “signature” in the ancient Indian culture. The seals are inscribed with various motifs — the sun, the moon, the stars, the planets, zodiac signs and so on. These seals came to be used as signatures by kings and other prominent people in the ancient times.
How much can you borrow under the Mudra loan scheme?
The amount of the loan will depend on your business category and on your capability to repay the loan. In general, the maximum loan amount is INR 10 Lakhs. However, the amount may vary depending on the business category you belong to. The eligible business categories for Mudra loans are as follows: - Agriculture and allied activities. - Handicrafts and Village/ cottage industries. - Micro Irrigation. - Fisheries and aquaculture. - Fisheries and aquaculture. - Self-help groups (SHGs). - Fisheries and aquaculture. - Self-help groups (SHGs). - Fisheries and aquaculture. - Self-help groups (SHGs).
Which are the eligible business categories for Mudra loans?
The following business categories has Mudra loan eligibility: - Agriculture and allied activities. - Handicrafts and Village/ cottage industries. - Micro Irrigation. - Fisheries and aquaculture. - Fisheries and aquaculture. - Self-help groups (SHGs). - Fisheries and aquaculture. - Self-help groups (SHGs). - Fisheries and aquaculture. - Self-help groups (SHGs).
How to apply for a mudra loan?
If you are a business owner looking to apply for a Mudra loan, you will need to be registered with the Central Government’s Small Industries Development Bank of India (SIDBI) or with a state-level institution. Once you are registered, you can log on to the SIDBI website and fill out the application form. Once your application has been accepted, you can expect the loan to be credited to your business bank account within 20-30 days. If you are a start-up, you can approach SIDBI or a state-level institution to register yourself as a borrower. Once you are registered with the bank, you can fill out the loan application form online. You will have to provide details about your business, such as the product/service you are planning to offer and the estimated revenue or profit margin. The bank will assess your business proposal and decide if you can be granted a Mudra loan.
Things to remember before applying for a Mudra loan
- Before you start your loan application, make sure you understand the interest rates and repayment schedule of the loan.
- Before you apply for the loan, make sure you have created a business plan that has been approved by a financial analyst. This will help you get a better loan amount and speed up the application process.
- Make sure you have enough collateral to get a good loan amount. This way, even if your business fails, you will have enough assets to repay the loan.
- Make sure your business plan does not depend on the availability of government schemes for funding. The government has a habit of changing these schemes and reducing the funds.
- Make sure you have an unblemished credit history. If you have ever taken a loan and not repaid it on time or missed a payment, your credit history will reflect that. This could reduce your chances of getting a loan.
Final Words
Mudra loans, while not a new concept, have gained popularity in the recent past, thanks to the Mudra Yojana. It is a great way for small business owners to get funding for their start-up or existing business. With the Mudra Yojana, you can get loans up to INR 10 Lakhs with a government guarantee. Follow these tips to get a good loan and grow your business.
