Mudra Loan Documents

For a smooth MUDRA loan application process, applicants need to prepare a set of documents and know all about MUDRA loan scheme details. These include a filled application form, proof of identity and age, address proof, and business-related PM MUDRA loan documents. Additionally, specific documents like caste certificates for reserved categories and bank statements may be required to support the application.

What is the MUDRA Loan?

MUDRA Loan, under the Pradhan Mantri Mudra Yojana (PMMY), is a financial scheme launched to support small and middle-scale businesses, primarily in rural areas. It focuses on non-agricultural enterprises and offers three types of MUDRA loan categories:

  • Shishu Mudra Loan: For new or small-scale businesses, offering loans up to ₹50,000.
  • KishoreMudra Loan: Targets businesses ready to expand, with loans from ₹50,001 to ₹5,00,000.
  • TarunMudra Loan: For established businesses seeking growth or to manage cash flow, providing loans from ₹5,00,001 to ₹10,00,000.

All three Mudra Yojana, accessible solely to Indian citizens above 18, offer loans for trading, manufacturing, or service sectors, with a 5-year tenure. Explore Mudra loan eligibility requirements for detailed information.

Documents for MUDRA Loan

The Pradhan Mantri MUDRA Yojana (PMMY) requires applicants to submit various documents to verify their identity, eligibility, and business viability. Here is a comprehensive overview of the required documentation for different types of MUDRA loans:

  • Proof of Identity:
    • Aadhaar Card
    • PAN Card
    • Voter’s ID
    • Driving License
    • Passport
  • Proof of Address:
    • Aadhaar Card
    • Voter’s ID
    • Driving License
    • Passport
    • recent utility bills
  • Proof of Business:
    • Ownership documents
    • business address proof
    • establishment proof
  • Additional Documents:
    • Caste certificate for reserved categories
    • bank statements
    • income certificates
    • IT documents
    • Form 16 verified by a CA.

These are the PMMY documents required for swift disbursal and approval of your loan under the MUDRA loan yojana which is offered by the government of India.

Here are the additional documents you need to submit for specific loan types-

Vehicle Loan Under PMMY:

  • Vehicle loan application form
  • Two passport-sized photographs

Business Installment Loan Under PMMY:

  • Loan application form
  • Two passport-sized photographs
  • Trade references

Business Loan Under PMMY:

  • Loan application form
  • 12 months of bank statement

For Partnerships or Companies:

  • Partnership deed or memorandum and articles of association

Features & Eligibility Criteria of Mudra Yojana

  • No Collateral Required: Loans are unsecured, meaning no need for collateral or guarantors.
  • Processing Fees: No processing fee is required for loan applications, and there are no foreclosure charges.
  • Interest Rate: Explore competitive Mudra loan interest rates tailored to your needs and goals. Learn more about Mudra loan interest rates here.
  • Mudra Card: A debit card on the RuPay network that offers flexible access to working capital.
  • Eligibility: Indian citizens over 18 and below 65, owning micro, small, or start-up businesses in the trading, manufacturing, or service sectors.
  • Business Plan: A detailed business plan is often necessary to illustrate the utilization and repayment strategy for the loan.

MUDRA loans are designed to empower small businesses, providing them with the financial support needed to grow and thrive without the burden of traditional loan requirements.

Benefits of Taking a Mudra Loan

  • Low interest rates: Compared to many other loan options, Mudra loans typically offer lower interest rates. Although this rate varies from bank to bank, it is more affordable than other types of loans. 
  • No collateral or security required: Loans up to Rs. 10 lakh are provided without any collateral. It makes the loan accessible to small businesses without significant assets. 
  • Long repayment tenure: Borrowers can repay the loan over up to 5 years, easing the repayment burden. 
  • No processing fee: This reduces the overall cost of borrowing for small businesses. 
  • Inclusive eligibility: This scheme is open to a wide range of small businesses and entrepreneurs, including those from underprivileged backgrounds. You only have to be within the age limit of 18 to 65 years to access this loan.
  • Promotes entrepreneurship: It encourages self-employment and the growth of micro and small enterprises. 
  • Easy application process: The documentation and application process is relatively straightforward compared to traditional business loans. 
  • Supports various business needs: Whether it is for working capital, equipment purchase, or business expansion, Mudra loans can be used for multiple purposes. 
  • Government backing: As a government initiative, it provides a sense of security and legitimacy to the borrowing process. 
  • Potential for business growth: Access to affordable financing can help small businesses expand operations and increase profitability. 
  • Financial inclusion: It brings many small-scale entrepreneurs into the formal banking system.

These benefits make MUDRA loans an attractive option for small businesses and aspiring entrepreneurs in India. It supports the government’s goal of fostering economic growth through small-scale enterprises.

Important Points to Note:

Applicants should prepare all the necessary documents before submitting their loan application to their chosen lender. The lender will process the application, verify documents, and conduct due diligence before sanctioning the loan amount. For businesses with higher capital needs, some financial institutions offer collateral-free business loans up to Rs. 80 lakh. It comes with simplified eligibility criteria and minimal documental requirements. 

Remember that an Income Tax Return (ITR) for the past two years is typically required for MUDRA loan applications. This helps lenders assess the financial health and stability of the business. By ensuring all requirement documents are in order, applicants can streamline the loan approval process and increase their chances of securing funding through the MUDRA scheme.

How To Apply For Mudra Loan?

There are two ways of applying for MUDRA loans:

(1) Online Registration: This involves applying online at https://www.mudra.org.in/Home/PMMYBankersKit. You can provide financial details such as your passport number, address, and bank account, by registering online. In addition, the registration form states the amount of money you wish to borrow.

(2) Offline Registration: You can also apply for these small business loans if you do not live in an urban area and would need to go to a nearby city or town to get your loan. In this case, you will have to go to your nearest MUDRA Post Office, where they will take care of the whole process.

Business Loan Apply Online

Frequently Asked Questions:

1. Are loans availed under Mudra Yojana unsecured?

Yes, loans that you avail of under Mudra Yojana are unsecured loans. It means that you do not have to provide any collateral for availing the loan. In addition to this, you do not have to present any guarantor.

2. What are the charges about the loans availed under Mudra Yojana?

When you avail loan under Mudra Yojana, you are not required to pay any processing fee. There are also no foreclosure charges on the Mudra Yojana loan. It means that you can prepay the loan or close the loan before the term end without having to pay any penalty on it.

3. What is Mudra Card?

Even though the Mudra Yojana is a government program, it may only be used at government-approved banks and NBFCs. MUDRA has launched a new product called “MUDRA Card,” a Debit card issued on the RuPay network that provides hassle-free credit in a flexible method for the working capital limit to make it easier to withdraw the Mudra loan. Mudra card may be used as a cash credit or an overdraft, and it’s much like a debit or credit card to use. You can withdraw the borrowed money from any ATM or point-of-sale credit card swiping machine. You can make a purchase at any POS machine or through e-commerce websites.

4. What are the sectors for which you can avail Mudra Yojana loan?

Following are the enterprises or the sectors for which you can avail of the Mudra Yojana Loan:
The sector of food produce and packaging
For the purchase of the transport vehicle that transports both commodities and persons
Equipment or the machinery required for Personal, social, and community service activities
Traders and retailers can get loans for their respective businesses.
Textile goods and activities are a sector with a lot of opportunities.
Agriculture-related (equipment post-harvest) endeavors
Micro Units Equipment Financing Program

5. Can the large-scale businesses avail loans under Mudra Yojana?

No. Mudra Yojana is explicitly curated to cater to small-scale businesses or MSMEs.

6. Do I need a business registration certificate to apply for a Mudra Loan?

Yes, you typically need a business registration certificate as one of the essential documents required for a Mudra Loan application. While specific requirements may vary by the lending institution, having a valid business registration certificate is often a crucial eligibility criterion for obtaining a Pradhan Mantri Mudra Yojana Loan. It helps establish your business’s legitimacy and financial viability, making the loan application process smoother.

7. Will a detailed business plan be required to secure the loan?

Yes, to secure a Mudra loan, a detailed business plan is typically required. This plan outlines your business goals, financial projections, and how you intend to utilize the loan. Additionally, you’ll need to provide documents such as KYC details, income tax returns, bank statements, and any other specific documents mentioned in the Mudra loan application guidelines. A well-prepared business plan strengthens your eligibility for the Pradhan Mantri Mudra Yojana loan.