MUDRA loan – 5 Best Options to Consider While Availing It in India

As per a recent Government report, approximately 42.5 million beneficiaries have availed MUDRA loan till 2019. While 20.6 per cent of them have availed this loan to set up a new business, the rest of the people used the fund to expand their businesses. 

Pradhan Mantri MUDRA Yojana (PMMY) introduced Micro Units Development and Refinancing Agency (MUDRA) loan to provide financial support to micro-businesses. Any non-farming enterprise can avail credit under MUDRA scheme without pledging any collateral. 

Such a loan scheme is categorised in different types, allowing borrowers to choose whatever suits their business purpose the most. 

Best options to consider while availing a MUDRA Loan

MUDRA loan is a Government-backed initiative to boost business activities, especially those of small businesses, and consequently generate employment and improve the economic prowess of the nation. Borrowers can take advantage of this financing option in several different ways, and some of them are discussed below. 

Shishu 

Businesses suffer poorly due to lack of working capital. Especially for start-ups, such a shortage of funds is a common phenomenon. Considering this fact, the Government offers Shishu loan of up to Rs.50,000 to entrepreneurs looking to start their own business and create a source of income. It is one of the best funding options to raise capital of your business. 

Kishor

Kishor MUDRA loan is also available for existing businesses, offering a loan amount of up to Rs.5 lakh to eligible applicants. Individuals looking for convenient funding options to grow their small business can avail this loan under MUDRA scheme. Using the funds, they can perform various activities like procure inventory, expand business premises and others. 

Tarun 

Established businesses mostly come under this segment, and it sanctions up to Rs.10 lakh only to the eligible beneficiaries. Since it does not come with an end-use restriction, business owners can utilise the funds for variegated requirements such as buying new inventories, hiring new workers, etc. 

However, if you require a higher loan amount of up to Rs.20 lakh with easy repayment option and flexible tenure, you can consider availing a business loan from a reputed financial institution like Bajaj Finserv. 

They also extend a pre-approved loan offer that makes the entire process of loan application effortless and prompt. This facility is available for several financial products like business loans, Personal loans, etc. You can also check your pre-approved loan offer instantly by entering your name and contact number. 

Loans for Women under MUDRA Yojana 

In order to encourage more women to step in the business domain, the Government offers a loan amount of up to Rs.10lakh to aspiring female entrepreneurs. Any eligible business owner can apply for a MUDRA loan under this segment. 

Availing a loan under PMMY scheme, women can enjoy a flexible tenure of up to 7 years on loan repayment. Using the borrowed funds, they can expand their business along with increasing the working capital. 

Alternatively, they can also opt for a business loan with favourable terms and interest rates, if they fail to fulfil the eligibility criteria of the MUDRA loan. Most top financial institutions offer MUDRA loan, along with business loans, with competitive interest rates.  

MUDRA Card 

A MUDRA card is issued against each loan under this scheme. Beneficiaries can withdraw a certain amount of money from the working capital component of the loan quantum. It thus allows borrowers to regulate the usage of the borrowed amount and reduce the interest burden in the process. Beneficiaries can use this card as a cash card and withdraw money from ATMs and make payment via “Point of Sale” devices. 

A MUDRA card also helps in building a credit history of the beneficiaries by digitising the MUDRA transactions. 

Regardless of the business type, every SME needs a solid business plan to ensure growth and uninterrupted revenue generation. Nonetheless, availing a MUDRA loan can bridge any monetary gap, thus proving beneficial for small businesses and helping these stay agile for a longer period.