Shishu Mudra Loan - Features and Benefits

Explore Shishu Mudra loan online for small business loans. Check the features, documents required, application process and benefits of Mudra Shishu Loan.
Business Loan
APPLY
2 min read
26 September 2024

What is Shishu Loan?

The Shishu category under the MUDRA (Micro Units Development and Refinance Agency) Loan scheme is specifically designed to cater to micro-businesses and entrepreneurs who require a small amount of financial assistance to kickstart their ventures. This scheme offers loans of up to Rs. 50,000 without the requirement for collateral, making it accessible to a wide range of aspiring entrepreneurs, especially those from marginalised or economically disadvantaged backgrounds.

Shishu Mudra Loan features

Here are key features and details about the Shishu Mudra Loan:

  • Loan amount: Shishu Mudra Loans are meant for borrowers who need a modest amount of funds to start or expand their micro-enterprises. The loan amount under the Shishu category can go up to Rs. 50,000.
  • Eligibility criteria: The eligibility criteria for Shishu Mudra Loans are generally relaxed, targeting small and new businesses. Individuals, small entrepreneurs, and micro-businesses in need of financial support to start or grow their ventures can apply.
  • Application process: The application process for Shishu Mudra Loans is designed to be simple and accessible. Entrepreneurs can approach participating banks, financial institutions, and microfinance institutions to apply for these loans.
  • Interest rates: The interest rates for Shishu Mudra Loans are usually reasonable and affordable. These rates may vary among different lending institutions, and they are often determined based on the guidelines set by the Mudra scheme.
  • Repayment period: The repayment period for Shishu Mudra Loans is typically flexible. It allows borrowers to repay the loan amount over a reasonable duration, ensuring that the repayment terms are manageable for small businesses.

Documents & eligibility required for Shishu Mudra Loan

Documents and eligibility criteria for the Shishu Mudra Loan scheme vary slightly depending on the lending institution, but typically include:

Eligibility:

  1. Must be an Indian citizen.
  2. Age requirement varies but is usually between 18 to 65 years.
  3. Must be engaged in a viable business activity such as manufacturing, trading, services, or agriculture.
  4. The business should fall under the micro-enterprise category.

Documents:

  1. Identity proof (Aadhar card, PAN card, passport, voter ID, etc.).
  2. Address proof (Aadhar card, utility bills, rent agreement, etc.).
  3. Proof of business ownership or existence (trade license, GST registration, etc.).
  4. Business planor project report detailing the purpose of the loan and its expected outcomes.
  5. Bank account statements for the past six months.
  6. Income tax returns or financial statements for self-employed individuals.
  7. Any other documents as required by the lending institution.

Purpose of the Shishu Mudra loan

Shishu Mudra Loans can be utilised for various purposes related to the establishment or growth of micro-enterprises. This may include working capital requirements, purchasing of equipment or machinery, inventory maintenance, or other business-related needs.
The Pradhan Mantri Mudra Yojana, including the Shishu category, is backed by the Government of India. It reflects the government's commitment to fostering entrepreneurship, supporting small businesses, and promoting economic growth at the grassroots level.

Role of Mudra

MUDRA does not directly disburse loans to entrepreneurs. Instead, it acts as a refinancing agency, providing financial support to banks and financial institutions that, in turn, offer loans to micro-businesses and entrepreneurs.

The Shishu Mudra Loan, as part of the Mudra scheme, stands as a beacon of support for aspiring entrepreneurs and micro-businesses in India. Tailored for those in the early stages of their ventures, this initiative embodies the government's commitment to fostering economic growth at the grassroots level. By providing accessible and affordable financial assistance, the Shishu Mudra Loan empowers individuals to turn their business dreams into reality. Its simplicity in application, reasonable interest rates, and flexible repayment terms make it a valuable tool in promoting entrepreneurship and contributing to the inclusive development of the nation's economy.

Benefits of online Shishu MUDRA loan

The special benefits of online Shishu MUDRA loan:

  • No need for customers to visit a branch.
  • Elimination of physical application submissions.
  • KYC verification is bypassed; only KYC-compliant customers are eligible.
  • No manual appraisal or sanction process by the branch.
  • Documentation is handled digitally, including e-stamping and e-signing.
  • No manual account opening or disbursement required.
  • Instant sanction and disbursement without any branch intervention.

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-approved limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

What is the maximum amount of Shishu Mudra loan?

The maximum amount of Shishu Mudra loan is Rs. 50,000 for new startups and micro-businesses. Under the Shishu category of the Mudra scheme, you can avail a loan of up to Rs. 50,000 for your working capital needs. If you are a new entrepreneur or a micro-business owner, you can get a Shishu Mudra loan of a maximum of Rs. 50,000 to fund your business operations.

What is the interest rate for Shishu Mudra loan?

The interest rate for Shishu Mudra loan is usually repo + spread (4.40%) p.a. The interest rate for Shishu Mudra loan may vary depending on the financial institute offering the loan.

What is the minimum margin for a Shishu Mudra loan?

There is no margin required for Shishu Mudra loan as it is a collateral-free loan. You do not need to pay any margin for Shishu Mudra loan as it is a zero-margin loan scheme.

Can we apply for MUDRA loan online?

Yes, the Ministry of Finance has established an online portal, mudra.org.in, where applicants can apply for MUDRA loans online. The portal provides complete details about the scheme, the application process, and the required documents. Applicants can fill out the online form and submit it along with the necessary documents for loan approval.

What is the interest on a Rs. 50,000 Mudra loan?

The interest charged on a MUDRA loan of Rs. 50,000 depends on the bank or financial institution that is providing the loan. The interest rate can vary between 8% to 20%. It is recommended to compare the interest rates offered by different lenders before applying for a MUDRA loan.

How can I apply for an online Shishu Mudra Loan?

To apply for the Online Shishu Mudra Loan, you can visit the official website of the bank offering the loan. The application process is entirely online, allowing you to fill out the application form digitally. You’ll need to provide necessary details about your business, financial requirements, and personal information. Once submitted, the application will be reviewed, and eligible applicants will receive instant sanction and disbursement without the need for physical documentation or branch visits.

Who is eligible for a Shishu loan?

Eligibility for a Shishu loan primarily targets micro and small businesses, including sole proprietorships and partnerships. The applicant must have a viable business plan and should be engaged in manufacturing, trading, or service sectors. Generally, individuals who are KYC compliant and have a clear credit history are more likely to be approved. The loan amount is typically meant for businesses requiring up to ₹50,000, ensuring it meets the needs of early-stage enterprises looking for financial support.

Can I take two Mudra loans?

Yes, you can take two Mudra loans from different banks, but it's essential to ensure that you meet the eligibility criteria set by each bank. When applying for a second loan, disclose your existing Mudra loan to the new lender, as they will consider your total debt obligations. This ensures that your repayment capacity is evaluated accurately. Always discuss your financial needs with both lenders to find the best options available for your requirements.

Show More Show Less