Shishu Loan Under PM Mudra Loan: A Complete Guide

Shishu Loan under PM Mudra Yojana helps new entrepreneurs with up to ₹50,000 for starting their business. Learn eligibility, application, and benefits.

Introduction

Pradhan Mantri Mudra Yojana (PMMY) is an initiative launched by the Government of India to provide financial assistance to small businesses and entrepreneurs. Among the different types of loans offered under this scheme, Shishu Loan is the most suitable option for those who are starting a new business or need initial capital to get their entrepreneurial journey underway.

In this blog, we will explore everything you need to know about Shishu Loan, including its features, eligibility, how to apply, and more.

What is Shishu Loan under PM Mudra Loan?

Shishu Loan is one of the three loan categories under the Pradhan Mantri Mudra Yojana (PMMY). It is specifically designed for individuals who are looking to start a new business or venture into entrepreneurship. This loan provides financial support to those who have a business idea but lack the required capital to make it a reality.

Under this category, businesses can avail up to ₹50,000, which is generally the starting capital required to set up a small business. Since this loan is for new businesses, the primary focus is on providing them with the much-needed financial support to get started.

Key Features of Shishu Loan

Here are some key features that make ShishuLoan an attractive option for new entrepreneurs:

• Loan Amount: You can avail up to ₹50,000 under the ShishuLoan category.
• Eligibility: This loan is available for individuals who are planning to start a new business or are in the process of setting up their business.
• No Collateral: One of the biggest advantages of the ShishuLoan is that no collateral or security is required. The loan is unsecured.
• Low-Interest Rate: The interest rates on ShishuLoan generally range between 8% to 12%, depending on the bank or financial institution’s terms and conditions.
• Repayment Tenure: The repayment period for this loan can range from 3 to 5 years, depending on the loan amount and your agreement with the bank.
• Easily Accessible: ShishuLoans can be easily availed from a variety of government banks, private banks, and Non-Banking Financial Companies (NBFCs).

Eligibility Criteria for Shishu Loan

To apply for a ShishuLoan, there are some basic eligibility requirements that you need to meet. Here’s what you need to know:

1. Age: You must be at least 18 years old to apply for this loan.
2. Business Type: You should have a micro, small, or medium business. The loan is primarily aimed at businesses that are in their early stages.
3. Financial Documents: You will need to submit financial documents like bank statements, income tax returns, or any financial history if available.
4. Business Plan: A clear business plan or proposal is important, especially if you are a new entrepreneur, as it helps the bank understand your business vision and financial requirements.

How to Apply for Shishu Loan under PM Mudra Loan

Applying for a ShishuLoan is simple and can be done through two primary methods: Online Application and Offline Application.

1. Apply Online

The easiest way to apply is through the official Mudra Yojana website. Here’s a step-by-step guide:

• Visit the official website of Mudra Yojana: www.mudra.org.in.
• Fill out the application form with your personal and business details.
• Provide all necessary documents like identity proof, business proof, income proof, etc.
• Submit the form and wait for the loan approval.

2. Apply Offline

If you prefer applying in person, you can visit your nearest bank (either government or private), which offers Mudra Loans. The process involves:

• Visiting the bank and filling out the Mudra Loan application form.
• Submitting the required documents.
• The bank will verify your application and, if everything is in order, approve the loan.

Documents Required for Shishu Loan

When applying for a ShishuLoan, you will need to submit the following documents:

• Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, etc.
• Address Proof: Utility bill, Voter ID, Bank Statement, etc.
• Business Proof: GST Registration, Trade License, or any relevant business document.
• Income Proof: Bank Statement, Income Tax Returns (ITR), or any other proof of income.
• Business Plan: If you are starting a new business, a business plan or project report detailing your business model, financial projections, and plans will be required.

Advantages of Shishu Loan

1. No Collateral: The biggest benefit is that you don’t need to provide any collateral or security for the loan.
2. Affordable Loan Amount: ShishuLoan provides up to ₹50,000, which is sufficient for starting small businesses.
3. Easy Application Process: The application process is straightforward, whether done online or offline.
4. Support for New Entrepreneurs: This loan is specifically designed to support people who are new to the business world, making it an ideal option for first-time entrepreneurs.

Repayment of Shishu Loan

The repayment of ShishuLoan is typically done through monthly EMIs (Equated Monthly Installments). The loan tenure can be anywhere between 3 to 5 years, depending on the agreement with the bank. Repayment starts after the loan is disbursed, and you can choose the EMI amount based on your business’s cash flow.

Conclusion

Shishu Loan under PM Mudra Yojana is a great opportunity for individuals who are looking to start their own business with minimal initial investment. With no collateral requirement, easy application process, and affordable interest rates, it offers the much-needed financial support to turn your business ideas into reality. If you’re a budding entrepreneur, the ShishuLoan could be the perfect start to your journey toward business success.

Make sure to follow the eligibility criteria, prepare your business plan, and apply for the loan through the official channels. Get started today and take your first step toward becoming a successful business owner!

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By: Cibilfree