Easy Mudra Shishu Loan Documents Required and Low Interest Rate
Prerna Sood
Prerna Sood
Friday 31 Jan 2025
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Mudra Shishu Loan scheme has been initiated by the MUDRA, which has been helpful for micro borrowing especially for new start up and other small businesses. Having a simplified process and requiring limited documentation to provide financial aid, the scheme has gained much attention. The Mudra Shishu loan scheme is for the businessman who are in need of capital to start or expand their business and get loan at very low interest rate. It is therefore very suitable for those people who would want to start up their businesses with a little capital investment. Therefore, in this article, we shall discuss the Mudra Shishu Loan documentations needed for application and why interest rates offered by the loan are suitable for business funding. Whether you are a new business person, or planning to start a new business, then the Mudra Shishu Loan could be the ideal solution for you.

What is a Mudra Shishu Loan?

The Mudra Shishu Loan is a part of the Pradhan Mantri Mudra Yojana, which was launched in 2015 by the Government of India to facilitate non-farm credit requirements for the MSEs. The Mudra Shishu Loan is for those businesses that have a loan requirement up to Rs 50,000. The main goal of this scheme is to promote ventures and business entities to expand by giving them the necessary financing without much formality.

List of Characteristics of Mudra Shishu Loan

1. Loan Amount: The Mudra Shishu Loan comprises a loan amount between Rs. 10,000 and Rs. 50,000/- only.

2. Eligibility Criteria: The loan is open to all the micro and small business enterprises, which may include proprietary businesses, partnership firms, private limited companies, and start-ups.

3. Collateral-free: The best thing about the Mudra Shishu Loan is that it doesn’t need any form of security before the loan is granted. This makes it easy for small businesses to get the loans without putting forward their assets as security.

4. Minimal Documentation: The Mudra Shishu Loan comes with fewer document requirements than most of the conventional bank loans due to the documentation process.

Interest rate for Mudra Shishu Loan

The Mudra Shishu Loan is fixed at a reasonable interest rate; therefore, the interest charged is quite reasonable for small businesses. The interest rate is benchmarked on the MCLR of the associated bank and falls between 8.5% and 9% annually. The interest rate may, therefore, slightly differ from that of one bank to another.

Documents needed for Mudra Shishu Loan

To apply for a Mudra Shishu Loan, you will need to submit the following documents:

1. Proof of Identity: You will be required to get a voter ID, Aadhaar, driving license, or passport as proof of identity.

2. Proof of Address: The address proof should be in any form of utility bills, rental agreements, or bank statements.

3. Proof of Business Existence: This requires including copies of the business registration certificate or an affidavit in case your business is not registered.

4. Business Plan: In India, it is mandatory to prepare a business plan, and submission of the plan is compulsory to avail of the Mudra Shishu Loan.

5. Bank Statements: Please attach the document of the bank statement for the past six months to confirm your financial position.

6. PAN Card: For a loan application, it is obligatory to have a PAN Card.

7. Passport Size Photographs: You will be required to provide an additional two passport-size photographs.

8. Promoter's KYC Documents: Where the applicant is a partnership firm or a private limited company, the above KYC documents of the promoter(s) are also required.

How To Apply For a Mudra Shishu Loan

To apply for a Shishu Mudra Loan online, follow these steps:

1. Go to the nearest MUDRA loan branch or contact a bank, NBFC, or MFI empanelled under the Pradhan Mantri Mudra Yojana.

2. Complete the loan application form, which includes all details and the documents that must be submitted according to their requirements.

3. Completing the form, attach the necessary documents beside it.

4. Depending on the quality of your application, the lender will respond to your application with a loan offer.

5. If the terms and conditions of the loan have been agreed upon, it regards depositing into your account within 2-3 days.

Conclusion

Mudra Shishu Loan is one of the best programs that offer financial support to the small businesses and startups. The low interest charged on this form of funding and the reduced paperwork also make this a suitable option for people who intend to grow their businesses. By observing the guidelines noted above and ensuring that they contain all the required documents, it's easy to apply for and obtain a Shishu Loan to fulfill one's commercial needs. Never default on the loaning company’s payment so as to achieve a deserving good credit score that will help you in your business sometime in.

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