Complete guide on how to get a Mudra Loan


What is a Mudra loan?

Micro Units Development & Refinance Agency Ltd. (MUDRA) is a new institution set up by the government of India to provide funding to the non-agricultural, non-corporate sector income-generating activities of small enterprises that have credit needs below Rs.10 lakhs. MUDRA provides refinance support to micro business under the Scheme of Pradhan Mantri Mudra Yojana.

What are the benefits of a Mudra loan?

Mudra loans are extremely beneficial for the establishment and growth of small scale non-agricultural enterprises. Here are a few perks:

  1. Mudra loans are unsecured loans (just like personal loan) which means that the borrowers are not required to provide any collateral or security to avail of Mudra loan.
  2. No processing charges are required for availing of the Mudra loan.
  3. These schemes have no limitations of any minimum amount.
  4. The loans are provided for the funded and non-funded category, which brings an element of flexibility in the usage of funds.

What is the eligibility criteria for a Mudra loan?

Mudra loans extend credit of upto Rs.10 lakhs to enterprises and entities falling under the following categories:
1. All non-corporate non-farm enterprises.
2. Primarily engaged in income generation through manufacturing, trading and services.
3. Engaged in allied agriculture services since 1st April 2016.

What are the documents required to get a loan?

A Mudra loan is available for purchasing vehicles for commercial transactions, BIL (Business Installment Loans) and Business Loans Group and Rural Business Credit. Here is a list of documents required :

For vehicle loans

  • Mudra application form and vehicle loan application form
  • 2 passport size colour photographs
  • Photo Identity proof and address proof
  • Income proof
  • Bank statement (last 6 months)

For Business Installment Loan (BIL):

  • Mudra application form and BIL application form
  • Photo identity proof and address proof
  • Establishment proof
  • Bank statement (last 6 months) with Income Tax Return for 2 years
  • Ownership proof of residence/office
  • Proof of continuity of business and proof of qualification
  • Trade references
  • CA certified financials

For Business Loans Group and Rural Business Credit:

  • Mudra application form and BIL/RBC application form
  • Photo identity and age proof
  • Address proof
  • Ownership proof of residence/office
  • Business vintage proof
  • Bank statement (last 12 months) and Income tax return (last 2 years)

What are the schemes offered under Mudra loans?

There are three schemes offered under Mudra loans based on the stage of development a small or a micro enterprise is in:

Sishu: This particular scheme is meant for entrepreneurs who are looking to start a small business or in the process of establishing one. The basic norms of the loan are – provide finance for machinery and valid quotation and supplier details are essential.
Loan amount – Upto Rs.50,000

Kishor: This category of loan is targeted towards entrepreneurs looking to expand their business through the addition of fresh funds. The key requirements for availing of this loan are – existing balance sheet for the previous two years, bank account statement, income and sales returns, estimated balance sheet for the current year, technical and economic viability of the project.
Loan Amount – Rs.50 thousands to Rs.5 lakhs

Tarun: This category of loan is for entrepreneurs who are well established in the business but are also looking for further growth. Some of the key requirements are – all the requirements listed in the 2 schemes above, address and Identity proof, and a caste certificate, if under reservation.
Loan Amount – Rs.5 lakhs to Rs.10 lakhs

Written by

Priyanshi Bhardwaj