If you run a non-farm or non-corporate organization and are looking for financial assistance to get things done, a Mudra loan might just be your best possible bet. However, before you can even apply for a Mudra loan, you must first establish your eligibility, across a wide range of parameters. After verifying eligibility comes obtaining documents and once you have arranged all the relevant documents, depending on the type of mudra loan you are looking for, you can apply with some banking service providers hassle-free.
What is a Mudra loan and how is it separated?
For the uninitiated, Mudra Loan or rather the flagship PMMY program aims to make affordable business loans available to small and micro businesses. The main objective of this financial support is to ensure that these smaller and unrecognized structures can quickly enter the formal economic sector.
Coming to advertisements, as an eligible candidate or business owner, you can acquire up to INR 10 lakh with mudra loan. But then, Mudra Loan is further differentiated into three loan variants, depending on the nature of the business.
First, we have the Shishu loan, targeting micro units and featuring a maximum loan limit of up to INR 50,000. Next is the Kishore loan where the credit limit is capped at INR 5 lakh.
Finally, there is the Tarun loan with a maximum loan capacity of INR 10 lakh, and an extended phase regarding documents and business status reports.
Detailed Guide to Completing a Mudra Loan Application
If you want to apply for a Mudra loan, you must first connect with a competent banking institution and obtain a form to proceed. You have to fill in all the fields, but the tricky part comes when the associated documents need to be attached.
Once you have completed the Pradhan Mantri mudra yojana application form, you must complete it with 2 passport size images followed by the corresponding proof of identity and address. Also, you must attach ‘proof of income’, going back at least 6 months.
the List of Mudra Loan Documents also includes tax returns, including IT and sales tax returns followed by audited balance sheets for the past three years, project sheet extrapolated to at least two years, and proof of business existence. For the last part, you need to share ownership details, registration certificate, rental agreementdeep partnership, title deeds, lease deeds and any other documents you may have on hand to show the existence of the business.
Are there other aspects to cover?
Depending on the nature of the business loans, covered by the PMMY scheme, you may need to provide additional documentation including proof of business continuity, business references etc. Additionally, if you are looking for rural credit or group lending for a specific type of establishment, you may even need to provide proof of era and even one year bank statements.
More accommodating business loan options available from private and public financial institutions. Photo Courtesy: Pixabay
In conclusion
Applying for a Mudra loan is not as complicated as it may seem to some. However, you must first establish your eligibility before proceeding with the application. Additionally, if you are unable to obtain financing under the PMMY program, you can even research other more accommodating business loan options available from private and public financial institutions.
