· Table of Content
· What is MUDRA Loan?
· Types of MUDRA Loans
· List of Business Activities Covered Under MUDRA Loans
· Benefits of MUDRA Loan
· Eligibility Criteria & Documents Required
· How to Apply for a Mudra Loan?
· Why Opt for Mudra Loan from Bank of Baroda?
What is MUDRA Loan?
Micro-Units Development and Refinance Agency (MUDRA) is a scheme offered under the Pradhan Mantri MUDRA Yojana (PMMY). Launched in 2015, the scheme allows you to avail of business loans of up to INR 10,00,000 based on the different categories of MUDRA Loan schemes. All public sector banks, regional rural banks, co-operative banks, private sector banks, micro finance institutions, non-banking finance companies (NBFC), and foreign banks can lend up to INR 10 Lakhs to small borrowers for non-farming businesses.
Types of MUDRA Loans
The government has categorised the Mudra loans into three types based on the funding needs of the micro-unit or the entrepreneur. The loans are categorised as under:
MUDRA Shishu Loan
Under the MUDRA Shishu Loan, you can avail up to INR 50,000 for non-farming ventures. Shishu Loan serves well for newer enterprises for purchasing small-scale machinery or financing other operational costs. Existing businesses, too, can avail of the loan for smaller expenses such as renovation or expansion of the establishment. Micro-industries, self-proprietors, commercial vehicle owners, fruit and vegetable vendors, etc., are eligible applicants for the MUDRA Shishu Loan. Salient features include repayment tenure of up to 7 years, no minimum loan amount, no collateral and zero processing charges.
MUDRA Kishor Loan
The
loan amount offered by the MUDRA scheme under the Kishor Loan category ranges
from INR 50,000 to INR 5,00,000. Businesses can take advantage of the higher
loan amount to finance their daily operations, buy heavy machinery and
commercial transport vehicles, etc. Personal service providers like local
grocers, salons, courier agents, pharmacists, and tailoring shops, too, are
eligible to apply for Kishor Loans.
MUDRA Tarun Loan
The
Tarun Loan category of MUDRA Loan offers loan amounts starting from INR 5 Lakhs
to INR 10 Lakhs, with a 3 to 5 year repayment period. The loan can be availed
by aspiring as well as by established businesses. Newer businesses like
start-ups may require a high amount of working capital. Older companies can use
the loan to revamp or fund office expansion, make the necessary operational
purchases, etc.
List of
Business Activities Covered Under MUDRA Loans
Transport
Vehicles
You can
buy vehicles for transporting goods, and passengers, purchase tractors,
two-wheelers, trolleys and tillers for commercial use.
Community,
Social and Personal Services
You can
avail of loans for community businesses such as tailor shops, dry cleaning,
cycle and motorcycle repair shops, pharmacies, photocopying facilities,
gymnasiums, salons, courier services, etc.
Pisciculture
(fish farming), apiculture (beekeeping), poultry, livestock, dairy, etc., are
activities that are allied to agriculture and are eligible for MUDRA Loans.
Producing crops, irrigation, wells etc., do not qualify for such loans.
Benefits
of MUDRA Loan
Following
are the benefits of MUDRA Loan:
•
Accessibility:
Whether
you reside in rural or urban areas, you can utilise the banking and financial
services under the PMMY scheme. Individuals from the remotest areas, where
basic banking facilities are unavailable, can receive financial aid.
•
Credit Guarantee:
The
Government has created the ‘Credit Guarantee Fund for Micro Units’ or CGFMU
Funds to combat the issues associated with non-collateral requirement, thus
providing a sense of comfort to lending institutions.
•
Initial funding to start a new business:
Individuals
who wish to create a second income with low-cost businesses can benefit from
the scheme. Micro-credit scheme offers credits of up to INR 1 Lakh enabling you
to start a new business on the side.
verifies
your loan application. Once it is verified, the bank credits the funds into
your brand new Mudra Loan account, with which it also provides a Mudra Debit
Card.
Why Opt
for Mudra Loan from Bank of Baroda?
Bank of
Baroda is a public sector undertaking (PSU) bank serving Indians for over a
century and offers loans to borrowers under the MUDRA scheme. Here is why you
should opt for Mudra Loan from Bank of Baroda:
No
processing charges or collateral: Bank of Baroda charges zero processing fees
for the MUDRA Loan scheme. Moreover, you are not required to pledge any
collateral.
No
minimum loan amount: There is no lower limit on the amount you can borrow under
the scheme.
Longer
repayment tenure: Bank of Baroda offers repayment tenures of up to 7 years with
moratorium provisions subject to eligibility. Working capital loan borrowers
can avail a 1-year repayment period.
No
pre-closure charges: You can repay the loan before the end of your repayment
tenure without paying any pre-closure charges.