Mudra Loan Scheme: Simple guide to getting your business funded
What's the story
The Mudra Loan scheme, established by the Government of India, aims to fuel the growth of micro-enterprises across the country.
By offering loans up to ₹10 lakhs without the requirement for collateral, it provides a substantial opportunity for entrepreneurs looking to either start or grow their businesses.
While the application process might appear daunting, with the right guidance, obtaining a Mudra loan can be a breeze.
Step 1
Understanding Mudra loan categories
Mudra loans are categorized into three types: Shishu, Kishor, and Tarun, targeting businesses at varying stages of growth.
Shishu: New businesses can avail loans up to ₹50,000.
Kishor: Established businesses seeking expansion can apply for loans ranging from ₹50,001 to ₹500,000.
Tarun: Well-established businesses aiming for further growth can receive financial assistance between ₹500,000 and ₹1 million.
Determining which category your business qualifies for is essential before applying.
Step 2
Preparing your documentation
Proper documentation is key to a smooth Mudra loan application process.
Applicants should have their business plan, proof of identity (Aadhaar card or PAN card), address proof (utility bills or lease agreement), and recent passport-sized photographs ready.
For existing businesses applying under Kishor or Tarun categories, financial statements for the last two years are needed.
Having these documents in order will save you time and headaches during the application process.
Step 3
Choosing the right lending institution
Mudra loans can be availed through numerous public sector banks, private sector banks, cooperative societies, and even micro-finance institutions throughout India.
Each institution might have its own unique touch when it comes to processing applications or offering additional services along with the loan.
It's crucial to do your homework and pick an institution that doesn't just provide Mudra loans but also fits your business requirements and comfort level.
Step 4
Filling out the application form
After you have collected all the required documents and selected a bank, you need to complete the Mudra loan application form obtainable at bank branches or online on their websites.
The form requests comprehensive information about you and your business, such as legal structure, description of business activities, and annual revenue, etc.
Make sure to fill out this form meticulously and accurately, as any inconsistencies may cause delays in processing.
Step 5
Following up on your application
Once you have applied and provided all necessary documents, don't just sit back and wait.
Be proactive and check the status of your application either by directly contacting the bank officials or through online portals (if available).
This not only demonstrates your seriousness but also allows for any potential issues to be resolved quickly, facilitating a smoother process for obtaining your loan.