Best Ways to Apply for A Mudra Loan

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The government-led business funding scheme, Pradhan Mantri Mudra Yojana (PMMY) offers Mudra loan to help Micro, Small and Medium Enterprises (MSMEs) and individuals to expand and grow their enterprises. It also enables the management of cash flow, meeting working capital requirements, etc.

There are three categories under which Mudra loan is provided. Those are Shishu, Kishor, and Tarun. The limit of loan amount varies under all of these categories –

  • Credit up to Rs.50,000 available for new businesses under Shishu category.
  • Credit up to Rs.5 lakh available for established businesses under Kishor category.
  • Credit up to Rs.10 lakh available for well-established businesses under Tarun category.

The application procedure for the loan is also relatively easy. Businesses only need to complete a few simple steps to do so.

Ways to apply for a Mudra loan

The application process to avail financing under the Mudra scheme can be both online and offline. However, the online method proves to be the best way, since it is relatively less time-consuming.

  • Online application for funding under PMMY

Here are the main steps to be followed for an online business loan application under the Mudra scheme.

Step 1: Visit the selected lender’s official website.

Step 2: Proceed to download the application form available online.

Step 3: Next, fill up the form with all the necessary details.

Step 4: You also need to submit all the required documents with the filled up application form.

Step 5: For further loan formalities, a representative of the lender would get in touch with you.

Step 6: After the processing and verification of the online business loan application form, the loan amount will be disbursed to your account on approval.

  • Offline application for funding under PMMY

Individuals can also opt to apply for the loan offline with a chosen financial institution. To that effect, the following steps need to be followed.

Step 1: Research about the financial institutions that offer Mudra loans. Here, various parameters need to be checked, such as interest rate, features, and associated charges. After collecting all the necessary information, select the lender to apply with.

Step 2: Next, keep the relevant documents handy, which primarily include address proof, identity proof, and business ownership proof.

Step 3: Proceed to visit the lender’s branch and fill up the business loan application form with necessary business and personal details. The form needs to be submitted along with the required documents.

Step 4: If the information and documents are found to be authentic, the loan application will be approved, and the amount shall be disbursed to the bank account within specific business days.

While both the systems of application are fairly simple, lenders such as Bajaj Finserv further facilitate the process with pre-approved offers that make financing hassle-free and quick. Such offers are available on a range of financial products such as personal loans, business loans, etc. You can check your pre-approved offer by submitting basic details like your name and contact number.

Eligibility and documentation for the loan 

For an improved chance of easy Mudra loan approval, an applicant must ensure that basic eligibility criteria are met. They are as follows –

  • Age limit: Individuals need to be minimum 18 years and maximum 65 years of age.
  • Credit amount: Credit requirement must not exceed Rs.10 lakh.
  • Particulars of enterprise: Enterprises need to be from non-corporate and non-farm segments. Also, primary income generation should preferably be through the trading, manufacturing, or service sector.

Not fulfilling the eligibility requirements suitably is one of the primary reasons why lenders may deny loans to business owners.

Apart from meeting the eligibility criteria, mandatory documents should be submitted with the application form. If there is any discrepancy in that regard, a loan application is liable to be rejected. The main documents required for a business loan are –

  • Applicant’s identity proof.
  • Applicant’s address proof.
  • Identity proof of business.
  • Written business plan.

Individuals should also note that Mudra loan can be extended in the form of a conventional loan, bank guarantees, letters of credit, overdraft facility etc. Hence, it effectively caters to a wide range of requirements of businesses operating in the micro, small, and medium segments.

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