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
The eligibility for Mudra loans under Pradhan
Mantri Mudra Yojana provide loans to the following business owners and
purposes:
Shopkeepers, traders, vendors and service sector allied
business owners
Equipment for micro-units
Agri-related non-farm activities
Financing for certain commercial vehicles, tractors and
tillers
At the other hand, business loans are much more welcoming in
that respect. The qualifying requirements are generally as follows:
Business record (minimum two years)
Previous year's ITR (minimum INR 1.5 lakhs)
Minimum turnover of INR 5 lakhs
Place of business and house have to be different
Owner of business should own either a home or a business
place
Documents Required:
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.
Two passport size photographs
Your id proof (Passport, PAN card, voter ID, driving
license, or Aadhaar card)
Business address proof
If business premises are rented, a rent agreement for the
same
Your address proof (telephone bill, latest electricity bill,
passport, Aadhaar card, voter id, etc.)
Id proof of your business establishment
SSI registration certificate
Memorandum of Association and Articles of Association (in
case of a company)
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
Audited balance sheet of last two years along with income
tax and sales tax
Pollution board's clearance certificate
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:
Business address proof
PAN Card
Previous two years' ITR
