Business Loan Vs Mudra Loan

Mudra means Micro Units Development and Refinance Agency Ltd. Mudra means Agency for Production and Refinance of Micro Units Ltd. Introduced in 2015 under the Pradhan Mantri Mudra Loan, it aims to provide financial assistance to small, new, and emerging enterprises.

It also has other small enterprise growth programs. Support is the key, however.

A business loan is nothing but a credit product which NBFCs and banks provide. It is intended to assist business people in fulfilling their business needs, growth plans, capital expenditure etc. 

Business people are responsible for repaying the loan with interest as per the loan terms.

Key difference Between Mudra Loan and Business Loan

Interest rate is the primary factor which a borrower takes into consideration when applying for any form of a loan.

The interest rate for Mudra loan schemes is based on the bank you are applying for your loan from. It usually starts at 8 per cent.

There is a thriving market for business loans with plenty of buyers and a lot of sellers. Hence, sellers have become very competitive, especially with interest rates. To attract more and more business people, NBFCs are trying to provide business loans at low prices possible.

Eligibility

1. The eligibility for Mudra loans under Pradhan Mantri Mudra Yojana provide loans to the following business owners and purposes:
2. Shopkeepers, traders, vendors and service sector allied business owners
3. Equipment for micro-units
4. Agri-related non-farm activities
5. Financing for certain commercial vehicles, tractors and tillers
6. At the other hand, business loans are much more welcoming in that respect. The qualifying requirements are generally as follows:
7. Business record (minimum two years)
8. Previous year's ITR (minimum INR 1.5 lakhs)
9. Minimum turnover of INR 5 lakhs
10. Place of business and house have to be different
11. Owner of business should own either a home or a business place

Documents Required:

1. As you would expect, a Mudra loan needs much more paperwork than a business loan. Here's a rundown of the required documents to get one.
2. Two passport size photographs
3. Your id proof (Passport, PAN card, voter ID, driving license, or Aadhaar card)
4. Business address proof
5. If business premises are rented, a rent agreement for the same
6. Your address proof (telephone bill, latest electricity bill, passport, Aadhaar card, voter id, etc.)
7. Id proof of your business establishment
8. SSI registration certificate
9. Memorandum of Association and Articles of Association (in case of a company)
10. Partnership deed (in case of partnership businesses)

If the loan is for an amount more than INR 2 lakh, the following additional documents are also required

1. Audited balance sheet of last two years along with income tax and sales tax
2. Pollution board's clearance certificate
3. If you do not want to tackle this exhaustive list, you can always apply for a company loan. You will need limited papers, the majority of which will contain the following:
4. Business address proof
5. PAN Card
6. Previous two years' ITR
7. Previous nine months' bank statement