Applying for a Business Loan under the PMMY Scheme
Starting one’s own business can be very exciting and nerve-wracking at the same time. An entrepreneur in his business journey faces multiple roadblocks. One of which is the lack of trusted and hassle-free sources of funds and capital. Budding entrepreneurs in India require non-expensive loans. This Business Loan meets the urgent needs of one’s growing business.
A Business Loan can be obtained from banks against collateral securities and properties held by individuals and businesses. However, in 2015 our honorable prime minister addressed the issue of non-availability of credit to small business owners. These small business owners were spread across the nation who were unable to get bank loans due to a lack of guarantee.
PMMY (Pradhan Mantri Mudra Yojana) enabled infrastructure and processes that would provide business loans to small business owners up to INR 10,00,000 under this scheme. A person in need of a loan can connect to the below sources for applying for funds:
- Commercial Banks,
- Regional Rural Banks,
- Small Finance Banks,
- Cooperative Banks,
- Micro Finance Institutes, and
- Non-Banking Financial Companies
Representatives of the above institutes, banks, and companies will check if the borrower meets the Business Loan Eligibility criteria laid down under the scheme. There are three products under the scheme of PMMY under which a borrower can apply for a loan.
- Shishu – It covers loans below INR 50,000, it is suited for entrepreneurs who want to start a new venture
- Kishore – It covers loans above INR 50,000 up to INR 5,00,000, it is best suited for a small or micro business that is looking for more funds to grow the business
- Tarun – It covers loans above INR 5,00,000 up to INR 10,00,000, it is best suited for businesses looking for more funds for operating on a larger scale.
To meet the Business Loan eligibility, the borrower can be a small manufacturer, artisan, service provider, owner of a small shop or establishment, fruit or vegetable dealer. On submission of all required documents such as Proof of Identity, Proof of Residence, Proof of Existing enterprise, Income tax returns, estimated balance sheet; along with project report of the proposed business incorporation or expansion sustainability, a borrower can avail this loan. However, the borrower must be:
- A citizen of India
- Engaged in non-corporate, non-farming business
- Owner of Micro, Small, and Medium Enterprise (MSME), or wants to venture in one.
The major drawback that the MSMEs and small business owners faced involved each case of a Business Loan Interest Rate that was sky-high; charged to them by small financers. With the PMMY Scheme, this has been regulated and the banks offer reasonable Business Loan Interest Rate to borrowers as advised by MUDRA Ltd from time to time.
To apply for this loan you can follow the below steps:
- Keep all the required documents such as ID proof, Residence Proof, Business Proof, etc handy
- Visit the MUDRA website and fill the application for the loan along with all required documents, here you can select TATA Capital as your preferred lender
- Post-approval of the application form, and on fulfillment of the required verifications carried out by the lender, the borrower will get the MUDRA Card.
This MUDRA Card can be used as an ATM card and as a credit card with a limited overdraft facility.
Hence, when taking a loan for one’s business, a borrower needs to be mindful and assertive. It is important to understand all terms of the loan and its repayment schedules. Business Loan EMI Calculator helps to plan your repayments and fund outflows in advance. To help you in giving your business the freedom of funds it requires, we at TATA Capital provide a high level of hand-holding to help you achieve your dreams.