If you are reading this, then one thing that can be guessed easily is that you have already heard of Pradhan Mantri Mudra Yojna, PMMY, or simply Mudra Yojna somewhere. This is also possible that you have already collected lots of information about the scheme.
Here my aim also is to provide the same right information about the scheme, and then some important checks that should be done before applying for the scheme.
Putting the first thing first let us make our understanding about Mudra scheme - What is Mudra Scheme
About Mudra Scheme - What is Mudra Scheme
Pradhan Mantri Mudra Yojna, in short PMMY, or simply Mudra Yojna is a scheme for getting a loan for a new business, or for an existing business. It was launched on April 8, 2015, by the Prime Minister of India for financing mainly to businesses that run on a very small scale. In financial terms such businesses are called 'Micro Business Units'.
This 'Micro Business Unit' term is given to a business based on its investment in the business. The main purpose of the Mudra scheme is to make loans easily available to micro-units, like small traders, shopkeepers, manufacturers, and service providing firms for starting or for improvement of their businesses.
Mudra loans are given in three categories
1. Shishu - In this category loan amount up to Rs. 50,000.00 is provided by the banks,
2. Kishore - In this, loan amount above Rs. 50,000.00, but up to Rs. 5,00,000.00 is provided,
3. Tarun - In this, loan amount above Rs. 5,00,000.00, but up to Rs. 10,00,000.00 is provided.
Rs. 10.00 Lakh is the maximum amount that is given under the Mudra scheme. For availing a loan under the Mudra scheme, there is no requirement of giving any security, or a guarantee by any other person.
Now, let us talk about what are the important points, you should take care of before submitting your application.
1. Make a proper assessment of your requirement
This is the first and important point that should be taken care of. You must have a clear answer of - What amount do you need. Also, this answer should be based on the assessment of your business requirements. Often people approach a bank and ask for a business loan. When bankers ask them about the amount they need, they give very casual answers, sometimes their answers are far different from the actual amount that may be required. This creates a bad impression of you on bankers, and you may lose your chance of getting your loan application accepted.
2. Build a strong understanding of the business
There are various types of businesses. Every business requires a different set of domain knowledge to run that business successfully. Banks do not want to risk their funds by financing to those who do not have the necessary understanding of the business they want to run. So, you should have or you should acquire business domain knowledge before applying.
3. Prepare Loan Application properly
Most of the banks are accepting the loan application for Mudra Loans via online mode. But there they give in-principle approval only, if they find it satisfactory. After that, they may ask the applicant to submit a formal application and a set of documents for the purpose of verification. When asked, you should submit your loan application properly along with the required set of documents. For this, you should first obtain the application form from the bank, or from their website if it is available there. You should then fill it completely in clear legible writing, and attach the required set of documents with it in a proper order.
For applying directly via offline mode also, the same should be followed.
4. Submit the estimates also with the application
When you approach a bank to submit the application for a Mudra Loan, do not forget to submit the estimates also along with the application. An estimate, or quotation, also called proforma invoice should be submitted with the application itself. You can obtain it from the suppliers of machinery or equipment you want to purchase from the loan amount. Before submitting you should ensure that it contains your name, address, date of issuance, and total price of the machine including any tax or charges.
5. Approach the bank where you have an existing account
Mudra Loans can be applied to any bank doing business in your locality, or near the place of your business. But, you should submit your application to that bank first, where you have an existing account. It becomes easier for a bank to make a decision for giving approval to a loan if it knows the applicant from earlier times. When you approach a new bank, it takes some time for your verification, or it may give preference to its existing customers over the customers of other banks.
6. Keep your contribution amount ready
You will be aware that generally banks do not provide 100% loan of the total cost of the project, and the applicant also has to contribute his share in the cost of the project. Banks call it promoter's contribution, or margin. Here, in the case of Mudra loans, for Shishu category loans, bank finance is provided up to 100% of the total cost of the project. But, for Kishor and Tarun categories loans promoter's contribution is 10% minimum. It means if your estimate or the cost of the project is Rs. 4,00,000.00 Lakh, you will have to contribute at least Rs. 40,000.00 from your side and the bank finance could be maximum Rs. 3,60,000.00.
Therefore, when you go to a bank for a Mudra Loan, and you have assessed your total project cost, please keep ready your contribution amount also. Banks are keen to know that from where the applicant will arrange the margin amount. If the margin amount is not brought, there will not be any meaning for the banks of providing finance.
These are six important points you should check at. For getting your loan approved easily, you should be aware of what a bank thinks when it goes for finance. Often people approach banks for a loan with keeping only their points in mind and fail to understand what banks require for approving finance.
I hope I was able to simplify these points. If you have any question, or you want to know anything else related to these, please write in the comment section.
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