How Mudra Loan Yojana Benefits Your Start Up? All You Need to Know

How Mudra Loan Yojana Benefits Your Start Up? All You Need to Know

Starting a new business is always a challenging task, no matter where you live. Entrepreneurship comes with its own sets of rewards as well as risks. This is especially true for small businesses. However, the Mudra Loan Yojana can make the process of starting a new business more accessible and more affordable. In this article, we will examine the eligibility criteria for the Mudra loan as well as its benefits for start-ups.

What Is Mudra Loan Yojana?

Mudra Loan Yojana (Pradhan Mantri Mudra Yojana Scheme) is a government initiative that provides funding to small businesses. This loan scheme was started by the government of India in 2015 to help non-corporate, non-farm small and micro-enterprises access credit facilities. The loan offers working capital loans up to Rs. 10 lakh under the Mudra Scheme.

Eligibility Criteria For Mudra Loan

The eligibility criteria for the Mudra loan vary depending on the category of the loan being applied for. For instance, the eligibility criteria for Shishu (up to Rs. 50,000) category loan is different from the eligibility criteria for Kishore (between Rs. 50,001 and Rs. 5,00,000) and Tarun (between Rs. 5,00,001 and Rs. 10,00,000) categories.

However, The Primary Requirements For Obtaining The Mudra Loan Are:

The applicant must be an Indian citizen

The applicant must have a business plan

The borrower must not have defaulted on any previous loan

The borrower’s business must have been registered under Udyog Aadhaar or have a Type-2 PAN card.

Mudra Loan For Women

A unique feature of the Mudra loan for women is that it encourages female entrepreneurship. The scheme offers special incentives to women entrepreneurs. The government has ensured that women’s businesses get proper funding and support. Women entrepreneurs can avail up to Rs. 10 lakh under the Mudra loan scheme. However, there is no separate unit for women entrepreneurs. Therefore, they can choose to apply from any of the three units based on their business requirements.

Apart from this, Mudra loan also supports eligible businesses that include small manufacturing units, handloom weavers, artisans, beauty parlors, transport services, shopkeepers, street vendors, repair shops, and other such business activities in the service sector.

Benefits Of Mudra Loan Yojana For Start-Ups

1. Affordable Interest Rates

The Mudra loan scheme offers affordable interest rates, starting from 6.85% p.a. This is lower than the typical loan interest rates offered by banks, which are generally around 10-14%. Therefore, your start-up can access funds at a lower cost, which could allow you to allocate more funds towards improving your business.

2. Flexible Repayment Options

The Mudra loan offers flexible repayment options that allow business owners to adjust their payments according to their cash flow capacity. With the Mudra loan scheme, business owners can choose the suitable EMI, which means that your business funds won’t be stretched too thin.

3. No Collateral Requirement

The Mudra loan scheme does not require any collateral or guarantee for loans up to Rs.10 lakhs. This makes it easy for small businesses to access funding without having to put up their homes, vehicles, or other assets as security.

4. Quick Processing

The Mudra loan is a quick and easy way to obtain funding for your start-up, with the loan typically being disbursed within 15 days of the application being submitted. This makes the Mudra loan a great option for those entrepreneurs who require funding immediately.

5. Boost Financial Inclusion

The Mudra loan scheme is a powerful tool for financial inclusion in our country. It helps small business owners who might not have access to traditional funding sources such as banks get access to the required funding to start their businesses.

Conclusion

The Mudra Loan Yojana is an excellent initiative by the government of India to support the growth of small businesses. It offers affordable interest rates, flexible repayment options, speedy processing, and the added advantage of no collateral. Moreover, the focus on gender equality adds to the appeal of the Mudra loan, which encourages women entrepreneurs through incentives.

As such, small businesses should make an effort to obtain the funds they require under the Mudra scheme, so they can flourish under suitable funding for their future growth and profitability.

Overall, the Mudra loan scheme is an excellent way to boost financial inclusion in India and provide opportunities for budding entrepreneurs to turn their small business ideas into successful ventures.

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