Micro Units Development and Refinance Agency Limited is a non-banking financial company supporting the maturing micro-scale businesses in our country. They also support micro businesses under the Pradhan Mantri Mudra Yojana, launched in 2015. The PMMY is the primary scheme of the Government under which they offer three Mudra Loan types: Shishu, Kishor, and Tarun.

NBFCs, financial institutions, and others offer MUDRA Loans to microenterprises in the trading, services, or manufacturing sectors. It offers accessible, affordable, and structured financing options for new ventures. MUDRA Loans for new businesses are collateral-free because they are backed by the Credit Guarantee Fund for Micro Units. This feature makes them particularly accessible to first-time business owners.

Modes of funding

Under the PMMY scheme, two main financing options are available: The microcredit scheme and NBFCs. The microcredit scheme for small businesses is perfect for ventures requiring minimal investment. Loans up to Rs. 1 lakh are available and accessible by individuals, self-help groups, and joint liability groups.

On the other hand, NBFCs offer three types of MUDRA Loans for new businesses, such as Shishu, Kishor, and Tarun. Let us discuss each category in detail:

Shishu Loans

The Shishu category of MUDRA Loan for new business offers funds up to Rs. 50,000 for a term of up to six years. This Loan is designed for entrepreneurs who need a small amount to start their business operations. Applicants must submit a projected earnings plan and can select a preferred lender. This scheme requires no collateral security or processing fee.

Moreover, one can use the money sanctioned for any purpose related to the business, and there is no minimum limit at which these Shishu Loans start.

Kishor Loans

The Kishor MUDRA Loan is for adolescent businesses and ranges between Rs. 50,000 and Rs. 5,00,000. Your borrowing amount depends on your requirements, eligibility, and business scale. The repayment term ranges from three to five years. Applicants need to submit an economic sustainability report. This Loan helps you meet your daily business expenses and finance fixed investments, like buying machinery and equipment.

Tarun Loans

Tarun Loan is the perfect financing option for expanding and growing your business. You can get funding that ranges between Rs. 5,00,000 to Rs. 10,00,000, with a maximum term of six years. Preference is given to specific sectors such as food products, textiles, and agriculture. Applicants must present a comprehensive business plan to avail of this Loan type.

While investing in machines and equipment, you might pay your company’s ongoing bills with this sizable Loan amount.

Conclusion

You can apply for MUDRA Loans for startups on the Udyami Mitra portal, which connects applicants to suitable lenders. Visit the website, select Apply Now under the MUDRA Loan option, choose your status, fill in your professional and personal details, provide your business information and Loan category, and submit the application form and required documents to your lender. After submission, the Loan processing time typically takes about two weeks.