For any business to grow successfully, it requires capital infusion. It may not always be feasible to invest personal funds to finance this capital requirement. This is where availing loans come in handy. One such initiative by the Government of India is the Pradhan Mantri Mudra Yojana. Micro Units Development and Refinance Agency (MUDRA) loan scheme is the facility available under the PMMY. Here, funding is provided by way of individual loans, MSME and SME loan.
This scheme was introduced in the year 2015 with an objective to make finance available for the small-scale businesses in the country. Shishu, Kishor and Tarun are three schemes available under the PMMY.
Highlights of the PMMY
Some of the highlights for PMMY include no requirement of any collateral and zero processing fees. There is no minimum amount that can be borrowed but the maximum amount available under this scheme is capped at ₹ 10 lakhs. With a flexible repayment tenure of 3 years to 5 years, it is convenient for small enterprises to avail this facility. Further, the SME loan interest rates are affordable making it a go-to finance option for enterprises with small capacity. The SME budget of 2021 further encourages financing the small organisations with the motive to make these units self-sufficient.
What are the benefits of PMMY?
The Mudra loan facility is limited to businesses engaged in the manufacturing, trading and service sector. This encompasses the majority of the small enterprises in India. This lending facility is aimed to make affordable finance available to shopkeepers, traders, vendors and other MSME registered organisations. The PMMY scheme is covered under the Credit Guarantee Scheme offered by the Government. Any finance availed under this scheme can either be used as a term loan or can be overdrawn as need be. Further, all non-farm enterprises can avail this Mudra loan facility. An additional benefit in form of marginalised interest rates is available for the Scheduled Caste and Scheduled Tribe category. Further, the holders of a Mudra loan can also avail this facility. With such a wide SME loan eligibility, it can prove to be a much-needed boost for your business.
What are the documentation requirements of the PMMY?
The requirement of such business loan documents is also fairly simple. A self-written business plan along with the category of the loan application form, i.e. Shishu, Kishor and Tarun are the basic requirements. Next, KYC documentation of the owners as well as the business along with its registration certificate is also required. Lastly, you also need to provide the financial statements of your business for income proof.
With these nominal procedural formalities and wider accessibility to small enterprises, a PMMY can help change the landscape of small businesses in India.
