Why Businesses should think about Mudra Loan for Mudra Loan?

Why Businesses should think about Mudra Loan for Mudra Loan?

Mudra loan is extended for a variety of purposes which result in income generation and employment creation. Different banks like Commercial Banks, Regional Rural Banks, Small Finance Banks and NBFCs are eligible to avail of refinance support from MUDRA for financing micro enterprise activities

SBI e-Mudra loan offers business loan to Micro, Small and Medium Enterprises(MSMEs) under the guidance of the Micro-Units Development and Refinance Agency(MUDRA). SBI offers mudra loan at affordable interest rates to meet various requirements that include capacity expansion, modernization, buying machinery, business expansion, and business related purpose. The loan is offered to business enterprises in services, manufacturing and trading sectors.

Types of E-Mudra Loan

• Shishu Loan – The loan amount is up to Rs 50,000 and there are no processing charges. It is aimed to meet the needs of micro units and small business owners get started with their business. 

• Kishor Loan – SBI provides a loan of Rs 50,000 to Rs 5 lakh under this category. The borrowers must provide the necessary documentary evidence to show the status of the business when they submit the application for the Kishor loan. 

• Tarun Loan – This SBI Mudra loan is given to businesses that need the larger funding to grow and/or establish their businesses.

Who can apply for SBI e-Mudra Loan?

Under the Mudra Yojana loans are offered for business loans, making it easier for the Non-Corporate Small Business Segment(NCSB) to avail these loans. Anyone who is a shopkeeper, fruits/vegetable vendor, truck operator, food-service units, repair shop, food processors and others, both in rural and urban areas. 

Point regarding the SBI e-Mudra Loan

1. The guarantee provided by the CGFMU and NCGTC are limited to a repayment tenor of under 5 years/60 months.

2. SBI Mudra Rupay Cards to all the customers who have taken a loan under the Mudra Yojana.

3. Under the Mudra Yojana, all the loans that are being offered are secured by the Credit Guarantee for Micro Units and also guaranteed by the National Credit Guarantee Trustee Company. 

Details of the Three Types of SBI Mudra Loan

SBI e-Mudra Loan Eligibility

• For loan amount above Rs 50,000 applicant needs to visit SBI’ nearest bank branch for loan formalities. 

• Loan availability of Rs 50,000 as per directive of norm

• Maximum loan amount offered is Rs 1 lakh

• Maximum repayment period is up to 5 years

• Applicant must have account with SBI account for atleast 6 months

• Applicant must be a micro-entrepreneur

SBI Mudra Loan Eligibility -  

• The applicant should be residing at the same location for atleast 2 years. 

• Applicant must be engaged in a non-farm income generating activity, either in manufacturing or in the services sector.

• Applicant should not have defaulted on any loan availed earlier from any financial institution.

Borrowers financed under Mudra Loan are provided with RUPAY Debit cards named Mudra Card for cash withdrawals and Pos Transactions under 3 categories named as Shishu, Kishor, and Tarun. 

Tenure for SBI Mudra Loan Tenure – The purpose for which the financing is provided by the bank decided the tenure of the loan. SBI Mudra loan is repayable on demand if it was provided for working capital requirements (fund-based). For term loan and other business purposes, the SBI Mudra loan has a repayment period of 3-5 years, including the moratorium of up to 6 months given by the bank to the borrower. 

SBI Mudra Loan 2020

Various lenders offer business loans at varied interest rates. Before applying for the business loan one should compare the interest rates, processing fees and other charges with the available lenders in the market.

Business loans are available at interest rates which can be of two types—Flat rate of interest and Reducing rate of interest:

Flat rate of interest – These kind of interest rate is calculated on the full loan amount during its tenure. 

For example : A loan amount is availed by an applicant of Rs 1,00,000 at a flat rate of interest at 10% p.a for a tenure of 5 years. He will have to pay Rs 20,000 which is the principal repayment for the amount of (1,00,000/5) + Rs 10,000—interest at 10% of this 1,00,000 is equal to a total of Rs 30,000 per year. Over the tenure of the loan, the borrower will end up paying Rs 1,50,000 that is (2,500*12*5).

Reducing rate of interest - The interest calculation for the following month is done on the outstanding amount of loan. The EMI comprises interest rate which is payable for outstanding amount of loan for each month with the principal of repayment. The loan amount gets reduced, after each monthly installment. It is calculated each month on the remaining loan amount. 

Smooth running of business requires funds at regular intervals. Requirement may be big or small and accordingly an applicant avails loan to cater to his business needs.

An applicant business loan should be falling under the below mentioned criteria:

• Must be of age between 21-65 years of age.

• Must be a self-employed professional having a business stability of 1 year or a self-employed businessman having 2 years of business stability.

• Must be having a CIBIL score of 750 and above.

• Must be a self-employed non-professional in the business of manufacturing, trading, and services, sole proprietorship firms, private limited companies./ Must be a self-employed professional of CA, CS, Doctors, Architects.

• Loan amount applied for must be between Rs 1 lakh to Rs 1 crore.

How to apply for the SBI e-Mudra Loan

The process to apply for E Mudra Loan is quite simple and hassle free. The bank has established a separate a page where an applicant can apply and submit the required documents accordingly.

Here are the steps below:

• Visit the SBI’s e-Mudra portal through your mobile or computer

• Click proceed on the first page to begin

• On the next page, read the instructions to use the e-Mudra application and proceed with “OK”.

• Begin  the process by entering the basic details: Registered Mobile Number and SBI Savings/Current account number, followed by the desired loan amount.

• The next page is displayed the detailed application form. Fill the details and choose using the drop- down menu.

• Upload the documents as directed on the page.

• Click on “I Accept” for terms and conditions followed by the e-sign.

• To proceed with e-sign, enter the details of the Aadhaar Card and verify using OTP.

• On verification, the loan application is forwarded to the MUDRA loan department. 

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