Pradhan Mantri Mudra Yojana for MSMEs: Top 5 Benefits
Unlocking the Benefits of Pradhan Mantri Mudra Yojana for Small Businesses
According to recent data, over 47 Crore micro, small, and medium enterprises (MSMEs) have benefited from the Pradhan Mantri Mudra Yojana (PMMY) since its launch in 2015. This scheme has disbursed loans amounting to ₹27.75 Lakh Crore, becoming a lifeline for many MSMEs and new entrepreneurs.
Providing businesses with collateral-free loans of up to ₹10 lakh, this scheme enables them to grow, innovate, and create employment opportunities. Read further in this blog to learn about the scheme in detail.
What is the Pradhan Mantri Mudra Yojana Scheme for Small Businesses?
The scheme is an initiative which is taken by the Indian Government to provide financial support to micro, small and medium enterprises (MSMEs). Launched on April 8, 2015. this scheme aims to empower small businesses, startups, and entrepreneurs by offering easy access to loans up to ₹10 lakh.
Hence, this scheme allows MSMEs to access necessary financial assistance to grow, expand and sustain their operation without the requirement for collateral.
Features of Pradhan Mantri Mudra Yojana
THE PMMY scheme offers various features, making it an attractive financing option for small businesses. Check out the following points to know more:
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3 Types of Loan: Shishu (₹50,000) is for micro-business owners and new entrepreneurs; Kishore (₹50,001 to ₹5 Lakh) for growing businesses; Tarun (₹5 Lakh to ₹10 Lakh) for business expansion purposes
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Collateral-Free Loan: No requirement to pledge assets for seeking the loan
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Extended Repayment Tenure: A maximum tenure of 36 months
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Loan Amount: Up to ₹10 Lakh
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Purpose of Assistance: Providing financial assistance to MSMEs involved in manufacturing, trading, services sector and agriculture-allied activities
Pradhan Mantri Mudra Yojana Scheme Interest Rate
The interest rates charged for the loans under the PMMY scheme are reasonable and are decided per the policy decisions of banks and other lending institutions. While the rates may also vary based on the beneficiary’s credit profile and loan category, the range falls between 11.5% – 20%.
Benefits of Pradhan Mantri Mudra Yojana
The following 5 points are the benefits that small businesses can avail through a loan under this scheme:
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Easy Access to Financial Resources: Micro and small enterprises can secure finances easily and fund essential business expenses with a substantial Loan amount of up to ₹10 Lakh.
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Job Creation: By enabling businesses to grow and expand, the scheme contributes to job creation, particularly in rural and semi-urban areas
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No Collateral Requirements: MSMEs can access funds easily without providing any collateral, this reduces financial barriers
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Fostering Innovation: PMMY encourages first-time entrepreneurs by offering Shishu loans for startups, thereby promoting innovation and new business ideas.
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Sustainable Business Growth: The flexible repayment terms and affordable interest rates enable businesses to grow sustainably, without being burdened by high loan costs.
Document Required for Pradhan Mantri Mudra Yojana
Submit the following documents to access financial support under the PMMY scheme:
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KYC Documents: PAN card, Aadhaar card, Voter ID, or passport, driving license
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Address Proof As Per RBI Guidellines: Utility bills, rent agreement, or any other valid proof
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Financial Documents: Income tax return (ITR) of last year, and bank statements for last 6 months
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Other Documents: Passport size photographs, caste category certificate, and any other document required by the lender
Pradhan Mantri Mudra Yojana Eligibility
The eligibility for this scheme includes individuals, startups, small businesses, shopkeepers, and micro enterprises across sectors:
- Small and medium-sized businesses
- Partnership firms, sole proprietorship businesses, and limited liability partnerships (LLP) that are limited to the services, trading and manufacturing sectors
- Units of Small Scale Industry (SSI)
- Micro and small manufacturing units
- Entrepreneurs looking to start their new business or seeking to expand their existing one
How to Apply for Pradhan Mantri Mudra Yojana
You can apply for a loan under the scheme by visiting your nearest bank or NBFC. Additionally, you can also apply online by following these 3 easy steps:
1) Download the application form from your chosen lending institution’s official website.
2) Enter relevant details including PAN number, mobile number, business proof details and address verification details.
3) Submit the necessary documents and click on ‘Submit’.
Conclusion
The scheme is a robust government initiative that empowers small businesses by providing them with the necessary capital to grow and thrive. It eliminates the need for collateral and offers flexible loan options, becoming crucial for the success of many MSMEs.
Enhance your business’s financial stability and growth further – reach out to Kogta Financial for tailored financial solutions. Check our products and services and take the next step in your business journey!
