What is an E-MUDRA Loan?
E-MUDRA loan is a government scheme that offers financial assistance to small and micro-business enterprises. The scheme was launched in 2015 by the Prime Minister of India, Narendra Modi. Any Indian citizen who wants to start or expand their business can apply for an E-MUDRA loan.
What are the Goals and Objectives of e-MUDRA Loans
The goals and objectives of e-MUDRA Loans are multifaceted:
- Financial Inclusion: To provide financial assistance to small businesses and entrepreneurs who may not have access to traditional banking services.
- Promotion of Entrepreneurship: To encourage and support entrepreneurship by offering easy and accessible credit facilities.
- Empowerment: To empower individuals from various sectors, including MSMEs, artisans, and small traders, by providing them with the necessary financial resources.
- Digital Transformation: To leverage technology and digital platforms to streamline the loan application and approval process, making it convenient and efficient for borrowers.
- Economic Growth: To contribute to the overall economic growth of the nation by fostering the growth of small businesses and facilitating job creation.
Through these objectives, e-MUDRA Loans aim to drive financial inclusion, foster entrepreneurship, empower individuals, promote digital transformation, and spur economic development.
Benefits of E-MUDRA Loan
E-MUDRA loan has several benefits for the borrowers, such as:
- The loan amount ranges from Rs. 10,000 to Rs. 10 lakh, depending on the category and nature of the business.
- The loan can be availed for various purposes, such as working capital, machinery, equipment, raw materials, etc.
- The loan does not require any collateral or security, making it easy and accessible for small and micro entrepreneurs.
- The loan has a low interest rate, starting from 8.5% per annum, and a flexible repayment period, up to 5 years.
- The loan also provides credit guarantee cover, insurance, and other benefits to the borrowers.
Eligibility criteria for E-MUDRA Loan
To be eligible for an E-MUDRA loan, the borrower must meet the following criteria:
- The borrower must be a micro entrepreneur, engaged in manufacturing, trading, or service sector, including allied agricultural activities.
- The borrower must have a valid Aadhaar number, which is linked to their bank account and mobile number.
- The borrower must have a business plan or project report, detailing the purpose, amount, and viability of the loan.
- The borrower must have a good credit history and repayment capacity.
Types of E-MUDRA Loan
E-MUDRA loan is classified into three types, based on the loan amount and the stage of the business:
- Shishu: Under Shishu Mudra Loan, entrepreneurs can avail loans up to Rs. 50,000 for start-ups or new businesses, helping them meet their initial capital requirements and get their business ventures off the ground. This loan scheme offers a simple application process and hassle-free approval, making it an ideal choice for budding entrepreneurs looking for financial assistance to kick-start their entrepreneurial journey.
- Kishor: The scheme offers loans ranging from Rs. 50,001 to Rs. 5 lakh, which can be utilised for machinery, working capital, and other operational expenses. With flexible repayment tenure, the Kishor Mudra Loan helps businesses grow and improve their operations. By applying for this loan, entrepreneurs can get the necessary support for their businesses' financial needs, giving them the confidence to take their entities to new heights.
- Tarun: This category covers loans from Rs. 5,00,001 to Rs. 10 lakh for well-established businesses that need further growth or diversification.
E-Mudra Loan Interest Rate
E-Mudra Loan Interest Rate varies among different financial institutions aiming to support non-agricultural enterprises requiring credit below Rs. 10 Lakhs. Interest rates depend on eligibility and other factors. Here's a summary of interest rates offered by various banks:
- State Bank of India (SBI): Linked to MCLR, tenure of 1 to 5 years.
- IDBI Bank: Linked to Bank’s Base Rate and Rating, tenure of 1 to 5 years.
- ICICI Bank, HDFC Bank, Indian Overseas Bank, Canara Bank, Central Bank of India, and Allahabad Bank: Interest rates depend on guidelines.
- Bank of Baroda: 9.65% per annum, discretion of the bank.
- UCO Bank: From 8.85% per annum, discretion of the bank.
- Union Bank of India: 7.30% per annum, discretion of the bank.
Disclaimer: Interest rates are subject to change. Please verify before proceeding.
How to apply for E-MUDRA Loan?
The procedure for applying for an E-MUDRA loan is simple and hassle-free. The borrower can choose from two options:
- Online: The borrower can visit the official website of E-MUDRA and fill out the online application form with the required details. The borrower can also upload the necessary documents, such as Aadhaar card, PAN card, business proof, etc. The borrower will receive an OTP on their registered mobile number, which they have to enter to complete the e-KYC and e-Sign process. The borrower will then receive a sanction letter and a loan agreement, which they have to accept and submit online. The loan amount will be disbursed to the borrower’s bank account within 24 hours.
- Offline: The borrower can visit any branch of SBI or any other bank or NBFC that offers E-MUDRA loan and submit the physical application form along with the required documents. The borrower will have to sign the loan agreement and provide a post-dated cheque or ECS mandate for the repayment. The loan amount will be disbursed to the borrower’s bank account within a few days.
Who can apply for an E-Mudra Loan?
E-Mudra loans are available for a wide range of individuals, including small business owners, entrepreneurs, and micro-enterprises. To apply, you must be an Indian citizen aged between 18 and 65 years with a valid Aadhar card and a good credit history. Additionally, your business should meet certain eligibility criteria, such as being in operation for at least 6 months and generating a minimum annual turnover. Self-employed professionals, such as doctors, lawyers, and chartered accountants, can also apply. However, specific eligibility requirements may vary depending on the lender. Contact us to learn more about qualifying for an E-Mudra loan.
What is purpose can the mudra loan be utilised for
MSME entrepreneurs across various sectors are eligible for MUDRA loans, including:
- Transport Vehicles: Purchase of small goods transport vehicles, e-rickshaws, auto rickshaws, taxis, etc., for passenger and product transportation. Additionally, tractors, tractor trolleys, or power tillers solely utilized for business operations are eligible.
- Personal, Social, and Community Services: Salons, fitness centres, boutiques, tailor shops, dry cleaners, repair shops, DTP and photocopying facilities, drugstores, courier services, etc.
- Food Products Sector: Businesses offering catering services, cold chain trucks, cold storages, ice-producing units, ice-cream making units, biscuit, bread, and bun manufacturing, and agricultural produce preservation.
- Textile Products Sector/Activity: Handloom, power loom, Khadi, traditional embroidery, textile printing, apparel design, stitching, and non-garment textile products like bags, vehicle accessories, etc.
- Commercial Loans for Traders and Shopkeepers: Financial assistance for retail stores, trade, service businesses, and non-farm income-generating ventures, with loan sizes of up to ₹10 Lakhs per enterprise.
- Equipment Finance Scheme for Micro Units: Establishing micro-businesses by acquiring necessary tools and equipment, with loan amounts of up to ₹10 Lakhs per recipient.
- Agriculture-related Activities: Pisciculture, beekeeping, poultry, livestock-rearing, agri-industries, dairy, fishing, agri-clinics, agribusiness centres, and food processing, excluding crop loans and land improvements like canals and irrigation. Services fostering livelihood or income generation are also eligible.
Conclusion
E-MUDRA loan is a great opportunity for small and micro entrepreneurs to avail easy and affordable credit for their business needs. The scheme aims to promote entrepreneurship, employment, and economic growth in the country. The borrowers can apply for the loan online or offline, depending on their convenience and preference. The loan has a low interest rate, a flexible repayment period, and no collateral requirement, making it attractive and accessible for the borrowers.
Additional Read: Business Loan
Additional Read: Mudra Loan
