As we know Our Hon’ble Prime Minister launched PRADHAN MANTRI MUDRA YOJANA (PMMY) on 08 April 2015 with the motto of “FUND THE UNFUNDED” by bringing such enterprises to the formal financial system and extending affordable credit to them.
In our country estimate about 5.77 Crore smaller of the micro units engaged in manufacturing, trading and service sector As per NSSO (National Sample Survey Organization). The majority of them are outside the formal banking system and are unable to sustain or grow due to a lack of finance.
To resolve this issue our Prime Minister launched a specialized agency named MICRO UNITS DEVELOPMENT AND REFINANCE Agency(MUDRA) Ltd on 08 April 2015 and on the same day launched the captioned scheme PMMY.
Earlier we have seen that Mudra loan can get up to Rs 10,00,000/- by including all three categories i.e. SHISHU, KISHOR, AND TARUN. Now we are seeing how to get a Mudra loan up to Rs 10,00,000/- in this category.
How to Get a Mudra loan to Rs 10,00,000?
Mudra loan from Rs 500001 to Rs 100000 comes under TARUN CATEGORY. In this category, loans can be financed to businesses that are already well established and want to expand their business. There are two kinds of finance made under this category i.e., working capital (CASH CREDIT OR OVERDRAFT), and purchase of equipment or machinery (Term loan).
If you want to take cash credit or overdraft you need to follow the below-mentioned steps
Step 1
First, you need to find your eligibility whether you are eligible or not for this scheme. If you are eligible you need to duly fill and sign the MUDRA APPLICATION FORM, submit INCOME TAX RETURNS, BALANCE SHEET, CMA DATA, PROJECT REPORT, GST DATA, QUOTION FOR MACHINERY, STOCK STATEMENT, KYC etc to branch that you want to take loan.
Step 2
After submitting your all documents branch officials scrutinize all documents find your eligibility, and calculate your loan limit by the turnover method for cash credit.
Steps 3
After finding your eligibility and calculating your loan limit branch officials visit your residential place, and business place and cross-verify the details as you submit your documents.
Steps 4
Then after your satisfactory visit and documents, the branch manager sanctions the loan by giving you CASH CREDIT OR TERM LOAN as per your need.
What Is Cash Credit in Mudra Loan?
Cash credit is a type of loan facility in which an amount sanctioned by the branch is credited to this account however borrower can make transactions in this account like the current account for business purposes.in the way of a loan. All the transaction in CASH CREDIT accounts has to be done for business purposes only. You can not transfer funds to any individual accounts.
The limit calculation of cash credit accounts depends on several factors for example.
If an applicant submits the stock statement by mentioning available stock value is Rs 10,00,000/- present in his shop then the Bank finances 75% of the stock value means Rs 7,50,000/- and the remaining 25% as Rs 2,50,000/- kept as a margin the borrower’s has to contribute. Interest is charged monthly basis in a cash credit account only on utilized funds. It means if you have sanctioned cash credit of Rs 7,50,000/- and you utilized only 5,00,000 for business purposes then the interest charge only amounts to Rs 5,00,000/- not on the entire amount of Rs 7,50,000/-
What is a Term Loan in Mudra loan?
Term loan in mudra loan is a type of facility that is given to a borrower for the purchase of equipment or machinery for business. This type of loan can be financed against your estimate or quotation by keeping a margin of 25%.
suppose you want to buy any machine which has a cost of Rs 10,00,000/- then the bank can finance only rs 825000/- I.e. 75% of the quotation amount. The borrower has to contribute 25% amount of the quotation. After sanctioning the loan amount Bank makes a demand draft of the total quotation amount by including a 25% amount of the borrower contribution. The term loan can be financed for up to 84 months by the borrower.
What Are The Businesses Available for Mudra Loan?
The Government of India’s Pradhan Mantri Mudra Yojana (PMMY) aims to provide financial assistance to small businesses and agriculture-based enterprises.
1. Commercial Vehicles
Mudra loan can finance the purchase of commercial transport vehicles such as:
- Tractors
- Auto-rickshaws
- Taxis
- Trolleys
- Tillers
- Goods transport vehicles
- Three-wheelers
- E-rickshaws
2. Service Sector Activities
Mudra loans can be used to start businesses in the service sector, including:
- Salons
- Gyms
- Tailoring shops
- Medical shops
- Repair shops
- Dry cleaning
- Photocopy shops
3. Food and Textile Product Sector Activities
Mudra finance can support various activities in the food and textile product sectors, such as:
– Making papad, pickles, ice cream, biscuits, jam, jelly, and sweets
– Preservation of agricultural products at the rural level
4. Business Activities for Traders and Shopkeepers
Mudra loans can be used to establish shops and service enterprises, engage in trading and business activities, and conduct non-farm activities that generate income.
5. Equipment Finance Scheme for Micro Units
Mudra Finance provides up to Rs 10 lakh for equipment finance schemes for micro-units.
6. Agriculture-Related Activities
Mudra loans can be used for businesses related to agriculture, including:
- Agri-clinics and agri-business centres
- Food and agro-processing units
- Poultry farming
- Fish farming
- Beekeeping
- Sorting and grading
- Livestock rearing
- Agricultural industries
- Dairy farming
- Fisheries
What Are The Documents Required to Get a Mudra Loan?
- Proof of Identity: Voter’s ID Card / Passport / Driving License / PAN Card / Signature identification from preset bankers of proprietor, partner of director ( if a company)
- Proof of residence: Recent telephone bills, electricity bills, property tax receipt/Passport/voter’s ID Card of Proprietor, partner of Director (if a company)
- Proof of Business Address
- Applicant should not be a defaulter in any Bank/F.I.
- Last three years (Audited or Unaudited ) Balance Sheets of the units along with income tax/sales tax returns etc. (Applicable for all cases from Rs. 2 lakh and above)
- Memorandum and articles of association of the Company / Partnership Deed of partners etc.
- Assets and liabilities statement of promoters and guarantors along with latest income tax returns.
- Rent/ Lease Agreement (if business premises are on rent/ Lease ) and clearance from pollution control board if applicable.
- SSI / MSME registration if applicable
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