The Government of India in Budget 2024-25 has announced an increase in the loan limit under the Pradhan Mantri Mudra Yojana. Previously offering loans of up to Rs 10 lakh without any collateral, the scheme will now provide support if you want to open a business venture with loans of up to Rs 20 lakh. However, this enhancement in the loan applies only to those who have availed and successfully repaid loans they previously took under the Tarun category. Tarun category erstwhile included all loans ranging from Rs 5 lakh to Rs 10 lakh repayable within a maximum of 84 months. Under any of these categories, no collateral is required
Aspiring entrepreneurs who want to kickstart their businesses can also consider other variants of PM Mudra loans. They can choose Shishu Loans, for loans up to Rs 50,000 or Kishore Loans for loans ranging from Rs 50,001 to Rs 5 lakh repayable in a maximum period of 60 months in EMIs.
A MUDRA Card, a debit card issued against a MUDRA loan account, allows you to withdraw working capital as needed and manage loan interest efficiently. Government guidelines control interest rates, ensuring competitive rates in the loan market but individual banks offer different rates. Upfront fees or processing charges may apply based on the bank's internal guidelines. Most banks waive upfront fees for Shishu loans (covering loans up to Rs. 50,000), according to a government website.
In the Budget, Finance Minister Nirmala Sitharaman proposed a new assessment model for banks to provide credit to MSMEs, requiring public sector banks to assess credit eligibility themselves instead of relying on external assessment.
How To Apply For Mudra Loans Online?
Borrowers can apply online for Mudra loans through the government-run Udyamitra portal. Alternatively, they can be obtained from a nearby branch office of a bank, NBFC, MFI, etc.
If applying online, visit the PM MUDRA official website and select the UdyaMitra portal. Click on "Apply Now" and choose the appropriate loan category, such as New Entrepreneur, Existing Entrepreneur, or Self-Employed Professional. Use OTP for registration. Then fill in business information, including activity type and industry (Manufacturing, Service, Trading, or activities allied to agriculture). Now it's time to attach some or all of the following documents.
Also when going to the bank ensure that you have the following documents. They include Proof of identity and Proof of residence. Copies of relevant licenses or registration certificates related to the ownership, identity, and address of the business unit. Also statement of accounts for the last six months from your existing banker (if applicable) should be kept for perusal along with two copies of photos of the proprietor or partners.
For loan applications of Rs 2 lakh and above, you will also need to provide the following:
Balance sheets for the last two years
Income tax or sales tax returns
Projected balance sheets for the period of the loan (for term loan applications)
In certain instances, you need to demonstrate the sales achieved during the current financial year up to the date of application. If you are applying online, apply. The processing time usually ranges from one week to 10 days.
