Micro, Small and Medium Enterprises (MSMEs) are the backbone of the Indian economy. To empower these businesses, the government launched the Pradhan Mantri Mudra Yojana (PMMY) scheme, offering loans to entrepreneurs at various stages of growth without any Collateral Secuity provided by the borrower.
These loans are classified as MUDRA (Micro Units Development and Refinance Agency Limited) loans under PMMY.
MUDRA is a non-banking financial company (NBFC) which supports the development of MSMEs. MUDRA provides support by refinancing to banks, microfinance institutions (MFIs) and NBFC for lending loans to micro units having a loan requirement of up to 10 lakhs. Under this scheme, the loans are provided by Commercial Banks, Small Finance Banks, MFIs and NBFCs. The borrowers can approach any of these lending institutions or apply for loans online through the UdyamiMitra portal.
Understanding Shishu, Kishore, and Tarun Loans:
PMMY categorizes loans based on an entrepreneur’s needs and business stage. These categories are named Shishu, Kishore, and Tarun, signifying the growth trajectory of a business:
Shishu: This category caters to startups and budding entrepreneurs. It offers loans up to Rs. 50,000. This is ideal for financing initial inventory, equipment, or working capital for a small-scale business.
Kishore: As your business expands, you might require more funds. The Kishore category provides loans from Rs. 50,000 up to Rs. 5 lakh. This can be used to scale operations, purchase machinery, or renovate your workspace.
Tarun: Established MSMEs with a growing customer base can avail loans under Tarun. The loan amount ranges from Rs. 5 lakh up to Rs. 10 lakh. This can be used for further business growth, expansion, or even acquiring new ventures.
Loan Application Procedure:
- Approach a participating bank or financial institution offering Mudra loans, such as public sector banks, regional rural banks, or microfinance institutions.
- Submit the required documents as follows
- Loan Application Form
- KYC Documents
- Proof of Business Existance
- Business Plan
- CMA information (incase of working capital loans)
- The bank evaluates the application based on eligibility criteria, creditworthiness, and viability of the proposed business or project.
In reality, most of the Banks deny MSME loan applications as these are risky in nature due to lack of collateral security.
With PCMC, you can escape from all these strugles of finding right bank or finance institution, documentation processes, preparation of project reports or business plan etc. We are the best affordable Finance Consultants who has already facilitated multiple businesses with loans under MSME such as Overdraft facility, Term Loans for Machinery Purchases, Cash Credit Facility etc.
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