In April 2015, the Indian Government introduced the Pradhan Mantri Mudra Loan targeted towards small business owners. Under this, entrepreneurs and young business people can apply for Loans up to Rs. 10 lakh from the bank to efficiently start and run the business. Micro Units Development and Refinance Agency, called Mudra, aim to improve small business owners' prospects.
The Mudra Loan eligibility criteria and documents required before you apply for one are as follows:
General criteria
The objective of the Mudra Loan is to bring small enterprises and micro-units under a single, formal financial structure. You can apply for this Loan for varied reasons. However, the general criteria of the borrower are as follows:
- Must be an Indian resident.
- Need to be between 23 years to 28 years.
- Need at least a minimum monthly income of Rs. 17,000-plus.
- If you hold a business, produce at least an annual turnover of Rs. 15 lakh or more.
- Must be employed and hold a minimum work experience of two years if salaried and five years if self-employed.
- Should have an existing relationship with the bank from where you can apply for the loan.
Category wise eligibility
As stated, the Mudra Loan focuses on offering Loans to businesses and companies in the micro-unit sector. These are designed for low-income groups so that they can run the company smoothly daily. Essentially, the business owners falling under the mentioned categories or professionals who can apply for the Loan are:
- Partnership firms
- Proprietorship companies
- Service sector units
- Small manufacturing business
- Shopkeepers
- Fruit and vegetable vendors
- Foodservice units
- Truck operators
- Machine operators
- Repair shops
- Small industries
- Cottage industries in urban and rural areas
Documents needed
The Mudra Loan documents checklist is as follows:
- Application form: You can get the form from the bank or online. Fill the form stating the reason for Loan application, the stage or category you belong to, like Shishu, Kishor, or Tarun, and the desired amount.
- ID proofs: Government-approved ID proofs are permissible and feature your photo on the same. These include PAN Card, Aadhaar, Voter's ID, driving license, and passport.
- Passport-sized photographs: Give two recent passport size photos along with the application form.
- Address proofs: These include Aadhaar, driving license, ration card, utility bills, insurance papers, passport, etc. You must also produce the address proof of your business.
- Income proofs: The supporting income documents include the salary slips, six-month bank statements, IT proofs, etc.
Besides these, the Mudra Loan documents also include rental agreement if you are running the business in a rented property and partnership, lease, or title deed documents.