India is home to a considerable amount of micro, small, medium, and big businesses. This figure is expanding faster than before, and if it is effective, it might have a significant positive economic impact on the nation. Most people, primarily those in rural areas of India, lack the advantages of the standard financial system, such as loans, credits, insurance, etc. Hence, they were unable to develop and expand their micro companies. The Pradhan Mantri Mudra Yojana is a programme initiated by the Indian government to facilitate seamless money assistance. Under this programme, businesses can obtain financial assistance through a MUDRA loan and achieve their professional aspirations.
What is e-MUDRA Loan Scheme?
The Indian government offers MSMEs a specific kind of financing known as a mudra loan, which stands for micro units development and refinances agency loan. The Indian Prime Minister originally announced the programme on April 8, 2015. The e-Mudra loan programme intends to offer financial support to persons who currently operate or aspire to establish independent micro, small, or medium-sized businesses. A loan amount between ₹50,000 and ₹10 lakhs is available under this initiative.
The e-MUDRA loan has been divided into three categories by the scheme: Shishu, Tarun and Kishore.
This category serves the requirements of business owners who have just begun operating or whose operations are in the beginning stages. At a minimal rate of interest varying between 10% and 12%, loans up to ₹50,000 can be secured via this Mudra Yojana programme.
This category supports entrepreneurs whose businesses have already begun but requires capital to survive and flourish in the marketplace. This category also caters to business owners who require more funding to launch their ventures than Shishu Loan can provide. Under this segment of the Yojana, loans worth up to ₹5,00,000 may be obtained. It has a modest interest rate ranging from 14% to 17%.
This is the highest level of the scheme, and an individual is eligible for loans ranging from ₹5 lakhs to ₹10 lakhs. These loans are intended for entrepreneurs who need to establish a significant company or need money to grow their organisation. Under this category, loans up to ₹10,00,000 may be obtained. A nominal interest rate starting at 16% may be applied, although it depends on the lending company.
Difference Between e-MUDRA Loan and Business Loan
The basic points of difference between an e-MUDRA loan and a business loan are as follows:
- MUDRA loan is a scheme initiated by the Government of India. Whereas several financial institutions and banks offer business loans.
- The maximum loan amount for a MUDRA loan is up to ₹10 lakhs. The maximum loan amount for a business loan can vary from lender to lender.
- The interest rate for a MUDRA loan starts from 8%. The interest rate for a business loan is different from lender to lender.
- MUDRA loan is a no-collateral loan. Whereas a business loan requires collateral.
- The age limit for a person to avail of a MUDRA loan is 18-65. Whereas for a business loan, the age limit is 21-65.
- Only small and micro businesses from the non-farming industry can avail of a MUDRA loan. Any business owner can apply for a business loan.
Benefits of e-MUDRA Loan
Some of the benefits of the e-MUDRA loan scheme are as follows:
- This loan does not require any collateral.
- In the case of default, the government takes over the accountability of making the loan payments.
- The business owners intending to launch their micro firm will benefit the most from this loan.
- You can utilise this loan to get up to Rs. 10 lakhs in funding to start, grow, and expand your business.
- Small enterprises can participate in the MUDRA Yojana programme in urban and rural regions.
- You have the option of choosing to return your loan earlier or having the duration of the loan increased to even seven years.
- It assists you in meeting your company’s requirement for working capital.
- The MUDRA scheme’s loans also include special concessions for women business owners.
- This loan, which is part of the Pradhan Mantri Jan-Dhan Yojana, also includes an overdraft credit of up to ₹5000.
- A person may also request a MUDRA debit card, which gives them hassle-free, immediate access to funds.
Ultimately, MUDRA loans proved to be a game changer for small businesses and entrepreneurs in India, giving them the financial support they needed to expand and flourish. Because of the program’s low-interest rates, easy eligibility, and quick application procedure, it is a popular alternative for businesses wishing to grow or start enterprises. MUDRA loans have substantially contributed to creating jobs, economic expansion, and general economic growth in India. As the initiative develops and grows, it is projected to play an even bigger part in influencing India’s entrepreneurial ecosystem and enabling small enterprises to attain their maximum potential.