Applying for Mudra Loans Online: A Step-by-Step Guide

Micro Units Development and Refinance Agency (MUDRA) loans have become an essential financial tool for micro and small enterprises in India. These loans aim to provide financial support to individuals looking to establish or expand their small businesses. Applying for Mudra loans online has streamlined the process and made it more accessible. Under the scheme, loans up to Rs 10 lakh are provided to non-corporate, non-farm small/micro enterprises by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs, and NBFCs. To avail of the Mudra loan, you can approach these lenders or apply online through the Udyamimitra portal. The process to apply for MUDRA (Micro Units Development and Refinance Agency) loans in India was as follows. However, remember that procedures and requirements might have changed since then, so verifying the current process with the official MUDRA website or a reputable financial institution is essential.

Are you running a small business or planning to start a new one? You can quickly get credit support through the government’s Pradhan Mantri Mudra Yojana (PMMY). Udyamimitra.in is a digital offering of SIDBI. It is an interactive portal set up to facilitate MSMEs’ financial and non-financial service needs by enhancing the ease of access. On Udyamimitra.in, users can apply for any type of enterprise loan, including Mudra (up to Rs 10 lakh), Stand-Up India Scheme for SC/ST and Women (Rs 10 lakh to Rs 100 lakh), SME loans (up to Rs 10 crore).

MUDRA loans are specifically designed to support small and micro-enterprises, and they are categorized into three schemes based on the loan amount:

1. Shishu Loan: This category provides loans up to ₹50,000. It’s intended for small businesses in their early stages of development. Shishu loans are suitable for entrepreneurs who require a small amount of capital to start or expand their businesses.
2. Kishore Loan: Kishore loans range from ₹50,001 to ₹5,00,000. These loans are designed for businesses that have already established themselves and are looking for further expansion and growth.
3. Tarun Loan: Tarun loans offer funding from ₹5,00,001 to ₹10,00,000. These loans are for more established businesses that require larger amounts of capital for expansion, diversification, or other growth opportunities.

Key Features of MUDRA Loans:

• MUDRA loans are collateral-free, which means you don’t need to provide any security or collateral to obtain the loan.
• The loans are offered at competitive interest rates, making them affordable for small businesses.
• The loan tenure varies depending on the category of the loan and the purpose of funding.
• These loans can be used for various purposes, including working capital, buying equipment, business expansion, and more.
• MUDRA loans promote inclusive growth by focusing on financing businesses owned by women and underprivileged communities.
• The application process is designed to be simple and accessible, often allowing for online applications.

Eligibility Criteria:

The eligibility criteria for MUDRA loans can vary slightly from one lending institution to another, but generally, the following factors are considered:

• The business should be engaged in income-generating activities.
• The business should fall under the category of micro or small enterprises.
• The applicant should not have defaulted on any previous loans.

Here are the steps to apply for a MUDRA loan:

Identify the Appropriate Category: Determine which category (Shishu, Kishor, or Tarun) your business falls into based on the loan amount you require. Identify a bank or financial institution that is an authorized MUDRA lender. Visit their official website and navigate to the MUDRA loans section to gather information about their offerings and application process.

Prepare Necessary Documents: Gather the required documents, which typically include identification proof, address proof, business plan, and relevant financial documents.

The list of Documents are

• Identity proof (Aadhar card, passport, voter ID, etc.)
• Address proof (utility bills, lease agreement, etc.)
• A business plan outlining how you intend to use the loan
• Bank statements
• Income tax returns
• Any other documents requested by the bank

Approach a Financial Institution: Visit a bank or financial institution eligible for MUDRA loans. Many public sector and private banks offer MUDRA loans.

Fill Out the Application Form: Request and fill out the MUDRA loan application form. Provide accurate information about yourself, your business, and the loan amount you need. You will be required to fill out an online application form. This form will ask for details such as your personal information, business details, loan amount required, purpose of the loan, etc. Ensure that you provide accurate and complete information. Double-check before moving to the next step

Submit Documents and Business Plan: Submit the necessary documents and a detailed business plan outlining how you intend to use the loan funds and the potential for your business’s growth.

Await Loan Approval: The bank or financial institution will review your application and business plan. If everything meets the required criteria, your loan will be approved.

Receive the Loan: Once approved, your bank account will disburse the loan amount. It’s essential to use the funds for the specified business purposes. If your application is approved, you will receive an approval letter outlining the terms and conditions of the loan. Review the terms carefully and accept them if they meet your requirements. Once you accept the terms, the bank will initiate the disbursement of the loan amount to your designated bank account.

Scrolling down the “https://www.udyamimitra.in/MudraLoan” page, you can find the link “Click here to apply.” It will redirect to a new page where you must provide information like the amount of loan required, name, business address, etc., for registration. On this page, you can also “Assess your Scheme Suitability.”

After registration, you can apply for the loan. Your application will be viewed by many lenders for credit support. You can also apply to your “Preferred Lender.”

Before applying for the loans, you should view the checklist. A link for this is provided at “https://www.udyamimitra.in/MudraLoan”

If you find applying challenging, the Udyamimitra portal will help you connect with the correct person/agency to apply for the loan. The service offered by the agency or the person may be chargeable. For support, you must fill in basic personal details with a request for an agency/person on the Udyamimitra portal.

Keep in mind that MUDRA loans are collateral-free loans, which means you don’t need to provide any assets as security. The interest rates on MUDRA loans are generally reasonable.

Always verify the latest details and eligibility criteria on the official MUDRA website or by visiting the respective bank’s branch that offers MUDRA loans. Additionally, be cautious of fraudulent practices and deal only with authorized lenders.