Shishu Mudra Loan - A Gateway to Small Business Success

Learn about the accessible application process, reasonable interest rates, and flexible repayment terms that make Shishu Mudra Loans a catalyst for turning business aspirations into reality.
Business Loan
2 min read
16 November 2023

Mudra (micro units development and refinance agency) loan, a government initiative, empowers small businesses and entrepreneurs through financial support. Aimed at fostering economic growth, it provides accessible loans, promoting self-sufficiency.

What is a Shishu Mudra Loan?

Shishu Mudra Loan, a subset of the Mudra initiative, focuses on smaller enterprises. It is specifically designed to cater to micro-businesses and entrepreneurs who require a small amount of financial assistance to kickstart their ventures.
Shishu Mudra loan empowers local businesses, fostering self-reliance at the grassroots level.

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.

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 Mudra scheme, 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.

Disclaimer: We have discontinued this product (Mudra loan) at this time. Please contact us on +91-8698010101 to know more about the current financial services provided by us.

Disclaimer

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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.

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