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Eligibility Criteria for Business in PM Mudra Loan

Learn about the eligibility criteria for business in PM Mudra Loan, including business type, turnover, loan types, and no collateral requirements for small businesses.



Introduction

Learn about the eligibility criteria for business in PM Mudra Loan, including business type, turnover, loan types, and no collateral requirements for small businesses.

Are you a small business owner or entrepreneur looking to secure funding to start, expand, or upgrade your business? The PM Mudra Loan could be the perfect solution for you! But before you jump into the application process, it’s essential to understand the eligibility criteria for businesses. Fortunately, the requirements are straightforward and designed to support a wide range of businesses, especially in the micro and small sectors.

Let’s take a closer look at the eligibility criteria to ensure your business qualifies for this fantastic government-backed initiative!


1. Business Type: Micro or Small Enterprise

To qualify for a PM Mudra Loan, your business must fall under the category of a micro or small enterprise as per the MSME (Micro, Small, and Medium Enterprises) classification. This includes a wide range of businesses, from manufacturing and retail to service-based businesses.

  • Micro Enterprises: Businesses with investment in machinery or plant of up to Rs. 1 crore and an annual turnover of less than Rs. 5 crore.
  • Small Enterprises: Businesses with investment in machinery or plant between Rs. 1 crore and Rs. 10 crore, with an annual turnover of less than Rs. 50 crore.

The PM Mudra Loan is designed to help businesses in these categories by providing them with collateral-free loans to fuel growth and improve their operations.


2. Annual Turnover Limit

Another important eligibility requirement is the annual turnover of your business. To qualify for a PM Mudra Loan, your business must have a turnover of less than Rs. 10 crore. This ensures that the loan is focused on supporting smaller businesses that may have difficulty accessing funds from traditional financial institutions.

If your business has a turnover within this limit, you’re eligible to apply for a loan under the scheme.


3. Nature of Business: New or Existing

The good news is that both new and existing businesses are eligible for the PM Mudra Loan. Whether you’re just starting out or looking to expand an established business, this loan can help.

  • New businesses can apply for a Shishu Loan, which is designed to support businesses in their early stages, covering the initial setup costs, such as equipment, inventory, or working capital.
  • Existing businesses can apply for the Kishore Loan or Tarun Loan, depending on their funding requirements for expansion or growth.

The flexibility of this scheme makes it easier for businesses at different stages of development to access financial support.


4. Operational Viability of the Business

A crucial factor for both new and existing businesses is the viability of the business. You need to demonstrate that your business has a clear business plan and the potential for growth.

  • For new businesses, you must present a solid business plan that outlines your objectives, strategies, and expected revenue. While you may not have an operational history, a well-thought-out plan can prove your business’s potential.
  • For existing businesses, you need to showcase your financial track record, including your ability to generate revenue and maintain stable cash flow. This helps the lender assess the stability of your business and its ability to repay the loan.

The PM Mudra Loan is focused on supporting businesses that show promise, so having a viable business plan is a key component of eligibility.


5. Location of the Business: Must Be Based in India

To apply for the PM Mudra Loan, your business must be located in India. This is a government-backed initiative aimed at fostering the growth of small businesses within the country, so foreign-owned businesses or those based outside India cannot avail of this loan.


6. No Collateral Required

One of the standout features of the PM Mudra Loan is that it is collateral-free. Unlike traditional loans that require you to pledge assets like property or equipment as security, the PM Mudra Loan does not require any collateral, making it an attractive option for small business owners who may not have valuable assets to pledge.

This makes the scheme much more accessible to a wider range of entrepreneurs, including those with limited assets but a strong business idea.


7. Eligibility for Loan Types

The PM Mudra Loan offers three types of loans to cater to different business needs:

Shishu Loan

If you are a new business or a startup with limited capital, you can apply for the Shishu Loan. This loan provides funding of up to Rs. 50,000 to help you get started, buy equipment, or cover initial working capital costs. The Shishu Loan is designed to support businesses that are in their infancy and need financial assistance to set up their operations.

Kishore Loan

For businesses that are already operational and need additional funds for expansion, the Kishore Loan is a perfect fit. This loan offers funding between Rs. 50,000 and Rs. 5 lakh. It is aimed at businesses looking to grow, enhance their operations, or increase their working capital.

Tarun Loan

The Tarun Loan is ideal for well-established businesses that are looking to scale up their operations. If your business is well-established and you need a larger loan for upgrading infrastructure, purchasing machinery, or entering new markets, the Tarun Loan provides funding of up to Rs. 10 lakh.


Conclusion

The PM Mudra Loan is a fantastic opportunity for micro and small businesses to access much-needed funding without the burden of collateral. Whether you’re a new business just starting out or an existing business looking to expand, this loan can help you achieve your growth goals.

To recap, if your business falls under the micro or small enterprise category, has an annual turnover of less than Rs. 10 crore, and has a clear business plan, you’re likely eligible for the PM Mudra Loan. No collateral is required, and with flexible loan types like Shishu, Kishore, and Tarun, you have options tailored to your business needs.

So, what are you waiting for? Get started with your PM Mudra Loan application today and give your business the financial boost it deserves!


PM Mudra Loan Criteria, Types, Benefits & Applying


FAQs About Eligibility Criteria for Business in PM Mudra Loan:

What is the PM Mudra Loan scheme?

The PM Mudra Loan is a government initiative designed to provide financial assistance to small and micro-businesses in India. It offers collateral-free loans to help them grow and expand.

Who is eligible for the PM Mudra Loan?

Business owners operating in the micro and small enterprise sectors with an annual turnover of less than Rs. 10 crore can apply for this loan.

What types of businesses can apply for the PM Mudra Loan?

Both new and existing businesses in sectors such as manufacturing, services, retail, and trading can apply for the loan under the PM Mudra scheme.

Does the business need to be registered to apply for the PM Mudra Loan?

While registration is not mandatory, having a business registration (like GST, Udyog Aadhaar, or other licenses) can help in making the application process smoother.

What is the annual turnover limit for eligibility?

The business must have an annual turnover of less than Rs. 10 crore to be eligible for the PM Mudra Loan.

Can a first-time entrepreneur apply for the PM Mudra Loan?

Yes, a first-time entrepreneur is eligible to apply for the Shishu Loan, which is designed for new businesses and startups.

Is there a requirement for a specific type of business plan?

For new businesses, a viable business plan that outlines your objectives, market research, and financial projections is required. Existing businesses will need to demonstrate a proven financial track record.

What is the age limit to apply for a PM Mudra Loan?

Applicants must be at least 18 years old and should generally be below 65 years of age.

Do I need to provide collateral for the PM Mudra Loan?

No, the PM Mudra Loan is collateral-free, meaning you don’t need to pledge any assets or property as security for the loan.

Can a business with no formal registration apply for the PM Mudra Loan?

Yes, businesses without formal registration can apply, but it’s recommended to have some form of business identification like GST registration or Udyog Aadhaar.

What are the loan types under the PM Mudra Loan scheme?

There are three types of loans:
Shishu Loan: For new businesses up to Rs. 50,000.
Kishore Loan: For growing businesses up to Rs. 5 lakh.
Tarun Loan: For established businesses up to Rs. 10 lakh.

Can a business with an annual turnover of more than Rs. 10 crore apply?

No, businesses with an annual turnover exceeding Rs. 10 crore are not eligible for the PM Mudra Loan under the current eligibility criteria.

Does the business need to be in a specific location to apply?

Yes, the business must be based in India to be eligible for the PM Mudra Loan.

What documents are needed to apply for a PM Mudra Loan?

Key documents include:
Aadhar card
PAN card
Business plan
Proof of address
GST registration (if applicable)
Income tax returns and bank statements for existing businesses.

Can multiple loans be applied for under the PM Mudra scheme?

Yes, a business can apply for multiple PM Mudra Loans, as long as the business continues to meet the eligibility criteria for each loan type and repayment terms.


By: Cibilfree


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