What are the eligibility criteria to get a mudra loan?
When the government introduced the MUDRA Loan scheme in 2015, it was done to help small and micro businesses with capital. Every business needs money to run, and this scheme under the Pradhan Mantri MUDRA Yojana made it much easier for companies to avail of loans. It applies to new businesses trying to start anew or existing businesses requiring capital input. It can be availed at any public sector bank, public sector bank or microfinance institution. On approval, the debtor will receive a debit card to use the loan amount for their business. However, the applicant must meet the Mudra loan eligibility criteria to avail of the loan successfully. The application process has multiple steps, and one has to fulfil and complete all of them to be sanctioned for the loan. The loan amount under the scheme ranges between INR 50,000 to INR 10 Lakhs. Within this range, there are three slabs. They are called Shishu, Kishore and Tarun. Shishu allows individuals to avail of up to INR 50,000 at the early stages of their business. Kishore is when it’s between INR 50,000 to INR 5 Lakhs. The final slab is Tarun, which allows between INR 5 Lakhs and INR 10 Lakhs. Read further to know the eligibility criteria to avail of the mudra loan:
- Who should you be?
The Mudra scheme is not a general loan scheme anyone can apply to. Given that it was specifically introduced to help MSMEs and small businesses under the scheme and to help grow entrepreneurship in India, you need to be a small business to apply for it. You can be a small manufacturer, an artisan, a fruit and vegetable vendor, or a shop owner, and agriculture-related occupations such as livestock, poultry etc., are all eligible businesses applying for the mudra loan. The entity can be a new or an existing one to use and avail of the loan.
An applicant trying to avail of the mudra loan must be a minimum of 18 years of age. However, there’s also a maximum age limit wherein nobody above 65 can apply for it. Therefore, one must be between 18 to 65 years of age to be eligible for the mudra loan.
- Identity and documentation
One must be a citizen of India to be able to apply for a loan. However, one of the most critical steps is documentation. Wherein you are required to provide a photograph with the application; your identity and address proof documents; documents on belonging to special categories if that applies to you; documents on your business if it’s an existing business; bank statement for the last six months; and any other additional documents asked for by the bank or financial institution.
- Collateral or guarantee
One of the most significant advantages of the mudra scheme is that it doesn’t require any collateral, third-party guarantee, or security.
Although the eligibility mentioned above criteria are the same across all institutions, interest rates and EMI options might differ based on the bank in question. One can use the EMI calculator business loan to enquire about the same. Regardless, it’s a beneficial scheme that’s a boon to the Indian entrepreneurship culture.