Who Is Eligible For The e-Mudra Loan & What Does It Offer?

Numerous tasks can be accomplished with borrowed money. It can be used for many things, including starting a new business to obtaining a student loan, and more. The e-Mudra loan is one such loan.

Micro Units Development & Refinance Agency Ltd., also known as MUDRA, is a financial organisation established by the government of India for the growth and refinancing of small unit firms. The honourable Finance Minister made the announcement when presenting the Union Budget for FY 2016.

But do you know who are the eligible borrowers of the loan? Continue reading on to find out everything about the e-Mudra loan and the benefits it offers to its customers.

Micro enterprises can now apply for an e-Mudra loan online if they have a loan requirement of up to ₹10 lakhs. The e-MUDRA loan program aims to boost the self-confidence of young people who want to start their own businesses and of small firms that are already operating to enable them to grow. A firm may utilise the money from an e-Mudra loan to set up its business, grow it, or cover its working capital needs. Numerous banks in the commercial and public sectors offer e-Mudra loans. This loan initiative is run under the scheme of Pradhan Mantri MUDRA Yojana.

The loan is primarily intended for individuals who work in the trading industry, own businesses or engage in agriculture. The PM e-Mudra loan is further extended to the following three categories:

• Shishu category - Loans up to ₹ 50,000/-

• Kishore category - Loans up to ₹ 50,001/- to ₹ 5 lakhs

• Tarun category - Loans up to ₹ 5,00,001/- to ₹ 10 lakhs

As a result, all advancements made on or after April 8th, 2015, that fit under the aforementioned categories are branded as MUDRA loans under the PMMY. These loan applications will include the name "Pradhan Mantri MUDRA Yojana" as well.

The companies which are only involved in the manufacturing, services, and commercial sectors, may apply for loans under the Mudra scheme. They are as follows:

• Partnership firms

• Solo proprietorships

• Individuals, self-employed professionals

• Public companies

• Private limited companies

• Any other legal firms or business entities

However, it is important to remember that the candidate should not have a history of any financial institution defaults and should have a positive credit history. Individual borrowers might need to be in possession of the required qualifications to carry out the intended activity.

1. Uncomplicated services

The MSME (Micro, Small, and Medium Enterprises) sector has long been disregarded due to a lack of trustworthy financial data and the assumption that they won't be able to make as much money. This hampered the growth of this sector due to the inability to access capital. Thankfully, by providing the MSME sector with speedy services and simple clearances, the Mudra loan plan has greatly benefited the sector.

2. No security is required

Like an unsecured kind of business loan, the Pradhan Mantri MUDRA Yojana loan does not obligate the borrower to pledge any significant assets as security to the lender.

3. Easy availability

All bank branches in the country offer Mudra loans under the PMMY. Additionally, e-Mudra loans are also provided by NBFCs and MFIs that finance micro-enterprises and other small businesses.

4. Reasonable interest rates

Interest rates are levied in accordance with the bank's policy decision. However, the interest rate imposed on final debtors is usually reasonable. It is assessed at the standard rate plus 1% to 7%. And depending on the risks involved and the customer's profile, the rate could also be higher.

5. Suitable for micro or small firms

Under the PM e-Mudra loan, individuals are given access to a micro-credit program for a specified income-generating micro-enterprise activity. This plan gives financial support to start-ups as well as micro-small businesses. The borrower's credit is guaranteed by the government under the Pradhan Mantri MUDRA Yojana plan. This implies that the government of India is responsible for repaying the loan if the borrower defaults on it.

All in all, the e-Mudra loan is a need-based term loan provided to eligible borrowers, primarily small business firms that require certain financial help to grow.