Can government sponsored small business loans help your female-owned venture succeed? In India’s small business landscape, female entrepreneurs remain disadvantaged due to a lack of access to adequate startup capital and affordable funding for growth.
The Pradhan Mantri Mudra Yojana scheme offers Indian women affordable financing to start or expand a business. This initiative aims to provide affordable funding to women entrepreneurs across sectors like retail, manufacturing, and services.
Read on to understand the start-up scheme and mudra yojana’s eligibility requirements, paperwork needed, loan options offered, and recent progress statistics. This article covers it all.
Understanding the Mudra Yojana scheme
Micro and small businesses in India that are not affiliated with farms or corporations are eligible for loans of up to ten lakh rupees via the Pradhan Mantri Mudra Yojana (PMMY), which was launched in April 2015.
The government’s goal in establishing PMMY is to assist small company owners in manufacturing, services, retail, and agriculture, as well as related sectors, in their attempts to recruit new workers.
This programme was initially created to help people who do not have a bank account (known as “unbanked citizens”) get access to mainstream banking, acquire microcredits, and learn to rely on themselves.
Additionally, this scheme is working with other organisations to promote an entrepreneurial culture that is inclusive, viable, and founded on values to increase self-employment, provide new employment opportunities, and aid in the economy’s overall expansion.
According to the bank’s policy, the consumer will pay interest rates. However, borrowers will be charged an acceptable interest rate in the end. To qualify for refinancing from MUDRA, scheduled commercial banks, RRBs, and cooperative banks must periodically comply with the interest rate guidelines provided by MUDRA Ltd.
The Mudra Yojana Scheme is dedicated to developing and promoting female entrepreneurs, considering the significant gender gap in the business and entrepreneurship landscape.
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Eligibility criteria
Here are the requirements that potential business owners and entrepreneurs must meet to be eligible for the Mudra Yojana Scheme:
Minimum age: This programme is open to female applicants aged 18 to 65.
Different types of businesses: Businesses in the service, retail, or industrial industries that are not farms or corporations are eligible to apply for the loan. Qualifying businesses include establishments like beauty salons, spas, garment making, and phone service.
Professional preferences: Women who have completed programmes at R-SETIs and other professional institutes, as well as those who work as craftsmen or artists, are given priority. This programme does not apply to retail businesses.
A solid credit record: Candidates should not have any traces of criminal activity and maintain a satisfactory credit score.
Required documents
Here are the necessary papers for the Mudra Loan Scheme:
- Application accompanied by two photographs
- A suitable business strategy
- Proof of identity (KYC) paperwork, including bank statements over the last six months
- Certificate of caste
- Verification of the business address
- Income tax returns from the prior year
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What is the Mudra Yojana scheme for women?
Under the Pradhan Mantri Mudra Yojana programme, also known as the Mahila Udhyami Yojana, the government has established a unique lending programme for female entrepreneurs.
Women business owners may get low-interest loans from this programme with flexible repayment terms and no collateral restrictions, totalling about ₹10 lakh.
Under the Mudra plan, both men and women can get these loans, which banks and other financial organisations give out.
The government has instructed every financial organisation, including banks, NBFCs, and microfinance organisations, to offer interest rates twenty-five basis points lower when providing Mudra loans to women business owners.
The lowered interest rates, along with the additional benefits offered by this programme, make a mudra loan for women an appealing option.
Features of the scheme
- There are three distinct types of loans available, each tailored to a different company stage and financial necessity. These include “Tarun,” “Kishore,” and “Shishu.”
- The payments are given out in partnership with state- and regional-level coordinators.
- Also, small businesses that are already up and running can get loans with low-interest rates to help them grow.
- Businesses in the service, manufacturing, and retail industries, as well as those in the agricultural and related fields (dairy farming, poultry, honey production, etc.), are eligible to apply for PMMY loans to cover the operational expenses.
- Following RBI regulations, lending institutions set the interest rate. If you borrow money for working capital, you only pay interest on the money you keep overnight.
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Sub-scheme under Pradhan Mantri Mudra Yojana
The government started the Mudra loan for women, which could help the MSME sector grow faster by giving loans to businesses of three different types:
| Categories | Maximum amount of loan | Description |
| Shishu | ₹50,000 | Entrepreneurs in the early phases of their ventures or those with small startup costs fall into this category. The maximum amount that an applicant can receive on a loan in this group is ₹50,000. |
| Kishor | ₹5 lakh | This group is for business owners in need of capital between fifty thousand and five lakh rupees. Entrepreneurs who have launched their businesses but require capital to expand them are part of this group. |
| Tarun | ₹10 lakh | If an entrepreneur needs more than the maximum amount for a start-up loan—₹10 lakh—they fall into this classification. |
Achievements under the Mudra Yojana scheme
After the scheme’s launch, over 40.82 crore loans totalling ₹23.2 lakh crore have been approved as of March 2023. New entrepreneurs have received about 21% of all approved loans. Women entrepreneurs have received around 69% of the total loans, while borrowers belonging to the SC/ST/OBC categories have received about 51%.
The majority of the loans (83%) were given under the Shishu category, which accounted for 40% of the total amount sanctioned. The Kishore category received 15% of the loans and 36% of the amount sanctioned. The Tarun category, on the other hand, received 2% of loans but the highest share of the amount sanctioned (24%).
Conclusion
For ambitious women business owners looking to launch or expand their companies, the Mudra Yojana Scheme is a lifeline.
The goal of this programme is to provide unsecured business loans to skilled women entrepreneurs so that they can start and grow their businesses. With over 40 crore loans approved since launch, the Mudra Yojana scheme makes growth possible for women striving to succeed on their entrepreneurial journey.
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