A microenterprise finance company known as Mudra, a government-backed NBFC, is set up to help support the growth of micro-enterprises. The Mudra loan for women aims to provide small businesses with access to finance that they wouldn’t otherwise be able to obtain.
According to Mudra.org.in, 90% of the small and medium businesses in the non-corporate sector don’t have access to such finance sources. In addition to providing refinancing support to several financial institutions, Mudra loan for women is part of a consortium of firms that includes public sector banks, private sector banks, regional rural banks, cooperative banks, state cooperatives, micro-financing companies, and non-banking finance companies.
Uses of the Mudra loan for business
An essential part of a country’s economy is the contribution of micro, small, and medium enterprises (MSMEs). Among the purposes of Mudra start up business loans for MSME’s are:
- Getting your business off the ground
- Expansion and growth of an existing business
- You can train competent employees as well as hire new ones
- Machinery purchases
- Obtain business working capital
- Vehicle purchase for commercial use
- Purchasing of equipment
Benefits
- A Mudra loan plan provides loans to small and medium-sized businesses that generate salaries.
- Mudra credit offers the advantage of not requiring the borrower to provide security or insurance. Mudra loans are also free of preparation charges.
- In the PMMY, you can apply the credit to store purchases or necessities that don’t require subsidizing. Mudra loans can now serve a variety of purposes.
- You can get term loans and overdrafts through Mudra loans and a letter of credit and bank guarantee applications.
- Mudra loans do not have a base credit sum.
- There is no need for collateral or security from a third party for any of the mudra schemes.
- It is very affordable for women to have a monthly interest rate that doesn’t exceed 1% for a Mudra Loan.
- It is straightforward to withdraw the sanctioned amount using the start up business loans card without physically visiting the bank.
Eligibility
Through its Pradhan Mantri Yojana scheme, the Indian government has developed a Mudra loan to assist small businesses in funding their operational and capital needs. The loan is open to everyone who owns a small business.
- Applicants must be at least 18 years of age and cannot be older than 65 years of age.
- Trade, manufacturing, and sources of income-generating businesses can access loans.
- You require a credit limit for rupees 10 lacs or more minor.
- An entity must provide allied agricultural services since April 2016.
Lenders need to have specific qualifications
For the financing of minor business activities, commercial banks, regional rural banks, small finance banks, and NBFCs are eligible to avail of MUDRA’s refinancing support. Up to 10 lakh can be refinanced for term credit or stirring capital.
MUDRA offers to refinance to qualified banks and non-banking financial institutions that comply with its guidelines and make loans to qualified Shishu, Kishore, and Tarun consistent activities. Financing banks/MFIs can expand additional facilities to energize the female entrepreneur, reducing the credit premium. To qualify for this Mudra loan for women, all public, private, and regional rural banks need to satisfy certain conditions.
- The last two years should have seen banks generate profits.
- Public, private, and regional rural banks should not perform assets exceeding 15%, 10%, and 6%, respectively.
- Banks of the private and public sectors should have a net worth above 250 crores, while banks of the rural sector should have around 50 crores.
