Imagine, dear reader, that you are sitting at your kitchen table, sketching out your business concept. You may wish to sew handcrafted bags, open a bakery, provide home beauty services, or teach a small coaching session. You’re both thrilled and uncertain: “Where will the money come from? What happens if my lack of substantial assets prevents me from obtaining a loan? What if I make a mistake when I’m doing this for the first time?
The good news is that the Indian government has created a special scheme called PMMY (Pradhan Mantri Mudra Yojana) specifically for budding business owners like you and me. It is specifically made to make it easier for “small” businesses—even non-farm, non-corporate ones—to obtain loans.
In this blog, we’ll learn what the PMMY scheme is, why it matters especially for women entrepreneurs, who can apply, how it works (loan types, features), how to apply, and what you may want to watch out for. Let’s get started!
What is the PMMY Scheme?
The Indian government introduced the Pradhan Mantri Mudra Yojana (PMMY) in April 2015 to assist micro and small businesses, which frequently struggle to obtain loans due to their lack of substantial collateral.
Simply said, it is a plan to assist you in obtaining a loan to launch or expand your business, even if this is your first time doing it. It focuses on small firms, or “non-corporate, non-farm” operations.
What are the types of PM Mudra Loan?
- Shishu: Covering loans upto up to ₹50,000
- Kishor: Covering loans from ₹50,001 to ₹5 lakh
- Tarun: Covering loans from ₹5,00,001 and ₹10 lakh
What are the Features of PM Mudra Loan?
- Collateral-Free Loans: No collateral or security is required.
- Minimum & Maximum Loan Amount: You can get a minimum loan of ₹50,000 to a maximum loan of up to ₹10 Lakh.
- Lower Interest Rates: Interest rates are competitive and depend on the lending institution (which provides loan).
- Focus on Women Entrepreneurs: Special support is provided to women to empower entrepreneurship.
- Wide Coverage: Available through banks, NBFCs, and regional rural banks.
- Repayment Tenure: Borrowers can repay the loan for up to 7 years.
Why is this beneficial for beginner women?
- Many women entrepreneurs start small, either locally or at home. They might not have many assets to pledge as collateral. Loans from PMMY don’t require collateral.
- It promotes women’s financial inclusion, enabling them to become job-creators rather than job-seekers.
- You can test your business idea with less risk and build gradually because the loan amounts are small (for the first time).
- It changes your perspective by acknowledging that you can start small and expand without waiting for approval from others.
What is the eligibility criteria?
- Must be a citizen of India.
- Age: You must be at least 18 years old.
- The company should be a micro or small, non-corporate, non-farm organization that generates revenue through manufacturing, trading, or services.
- A business plan that details how much money you need and your plans for using it, as well as any bank statements or other documentation, may be required.
- The required credit amount should be appropriate for the stage of your organization and should not exceed specific thresholds.
Following are important points for being eligible under this scheme:
- Applicants must not be defaulters and should have a satisfactory credit track record.
- Borrowers should possess the required skills, experience, or knowledge for the proposed activity/business.
- The need for educational qualification, if any, is assessed based on the nature of the proposed activity and its requirement.
What are the steps to Apply for a Mudra Loan?
Step 1: Go to the PM MUDRA official website and select the Udyamimitra portal. And click on Mudra loan “Apply Now.”
Step 2: Select one of the following: New Entrepreneur, Existing Entrepreneur, or Self-employed Professional.
Step 3: Fill in the applicant’s name, mobile number & email ID, then generate an OTP. After successful registration:
Step 4: Fill in personal and professional details. Select hand-holding agencies if assistance is needed for project proposals, or click “Loan Application Center” to proceed directly.
Step 5: Select the category of loan required: Mudra Shishu, Mudra Kishore, or Mudra Tarun.
Step 6: Provide business-related information, including business name, business activity, and industry type (Manufacturing, Trading, Service, or allied agricultural activities).
Step 7: Fill in additional details like owner information, your current loans/credit, new loans/credit you’re planning to take, future financial needs, and the banks or lenders you’d like to work with.
Step 8: Attach required documents: ID proof, passport-size photograph, address proof, applicant signature, proof of identity/address of business enterprise, etc.
Step 9: Submit the application. Then, an application number will be generated for future reference.
So dear woman entrepreneur, here’s your takeaway: If you’ve been dreaming of starting your own business, the Pradhan Mantri Mudra Yojana (PMMY) offers a supportive stepping-stone. It recognises that you might be starting small, you might not have big collateral, you might be juggling home and ambition — and yet, you have the spark to become your own boss.
Bookmark this blog for your future reference.
Comment “Business” if you wish to start your own business.
FAQs
Who is eligible to apply for a PMMY loan?
Anyone who is an Indian citizen, aged 18 years or above, running or planning a non-farm, non-corporate micro or small business can apply for a PMMY loan.
Is collateral required for a Mudra loan?
No, collaterals are not required in PM Mudra Loan Scheme
Can first-time entrepreneurs apply for PMMY?
Yes, first-time entrepreneurs can apply for a PMMY loan scheme to start their business.
Further read:
National Pension Scheme Details #NewbieInvestor