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Mudra Loan Eligibility: Criteria and Documentation

Under the Pradhan Mantri Mudra Yojana (PMMY) scheme, the Indian government has designed Mudra loans, supporting domestic SME owners and helping to cover capital expenditures and operating costs. Interest rates for Mudra loans range from 8.40% to 12.45%. Rs.10 lakh is the maximum amount that can be borrowed through this loan. Business owners who need more than Rs.10 lakh can use other commercial loans provided by banks and financial institutions.

Types of Mudra Loans

There are three schemes: Tarun, Kishor, Shishu.

  • Tarun: This scheme provides loans of 5 rupees or more and 10 rupees or less.
  • Kishor: This scheme provides loans of Rs.50, 000 or more and less than Rs.5lakh.
  • Shishu: This scheme offers loans of up to 50,000 rupees.

These schemes are designed to help meet the requirements of various activities and business units, as well as the requirements of entrepreneurs/business segments.

How do you apply for a Commercial Loan with Mudra?

To request a Mudra Loan

  • You must have all the necessary documents. The main documents you will need are an ID card, an address certificate, and a business certificate.
  • Approach a lender registered with the Mudra scheme and fill out the application form.
  • Please submit the necessary documents.

The Purpose

Mudra loans can be taken for a variety of reasons that help create jobs and generate income. The main purposes of the Mudra loan are:

  • Commercial loans for merchants, sellers, and other activities in the service sector.
  • Equipment finance for small business units.
  • Working capital financing via Mudra card
  • Vehicle loan.

Eligibility Criteria

Indian citizens who have their business plans for service sector activities, or commercial or manufacturing activities and need up to Rs.10, 000 can apply for Mudra loans. Mudra loans can be used from:

  • Public sector bank
  • Private bank
  • Regional bank
  • Small financial bank
  • Microfinance institutions
  • NBFC

List of Activities Covering Mudra Loans

Community, personal service, and social activities: Activities/businesses that can use Mudra loans under this heading include medical stores, boutiques, salons, gymnasiums, dry cleaners, beauty salons, motorcycle repair shops, tailoring, messaging services, photocopying and DTP facilities. Such

Transport vehicle: Mudra provides the purchase of merchandise transport vehicles and financing for personal transport such as rickshaws, tricycles, passenger cars, electric rickshaws and taxis for automobiles.

Food sector: In the food sector, Mudra loans can be used for activities such as pad manufacturing, pad manufacturing, jelly or jam, daily catering, small service stalls, refrigerated stores, ice cream manufacturing units, chain cars, etc.

Commercial loans for merchants: The Mudra loan under this heading can be used by people who need funds to manage stores, service companies, commerce, and commercial activities, and non-agricultural activities that generate income.

Textile products division: The Mudra loan of this title includes activities such as power room, hand-weaving, traditional printing and dyeing, knitting, computer embroidery, garment design, and other textile activities for non-garment products that can be used for dress-up, etc. 

Necessary Documents for Mudra Loan

If a borrower wants to obtain a vehicle loan based on Mudra Loan, the following documents must be submitted:

  • The application form for Pradhan Mantri Mudra Yojana has been officially completed.
  • The vehicle loan application form has been officially completed.
  • Two photos of the borrower’s passport size.
  • Photo ID, proof of address and income.
  • Bank statement for the last 6 months.

If a borrower wants to take a group loan of commercial and local business loans under Pradhan Mantri Mudra Yojana, he must submit the following documents:

  • The application form for Pradhan Mantri Mudra Yojana and the local company installment loan or credit application form has been officially completed.
  • Photo ID, age certificate, address certificate.
  • Property of residence or office.
  • Vintage business test.
  • Bank statement for the last 12 months.
  • Tax return for the past two years.
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