If you’re interested in applying for a Mudra loan to fund your business or personal expenses, you should know that these loans have eligibility criteria and documentation that must be met before an application can be processed. These are some of the most important factors when it comes to applying for a small business financial loan: -
Ensure You’re Eligible For A Mudra Loan
The first thing to do when you want to apply for a Mudra loan Eligibility is to make sure that you are eligible for one. This means that you must meet the following criteria:
- You must currently reside in India.
- You must be an Indian citizen or a citizen of Indian origin.
- You must be at least 18 years of age.
- You must be an individual or a proprietorship (sole proprietorship).
- You must have a valid bank account.
- You must have a valid ID or Address Proof.
Know Your Documents
What documents do you need to apply for a Mudra loan?
- Residence Proof – A copy of your address proof will help you prove your current address.
- Identity Proof – A valid ID will play an important role when you apply for a loan such as a passport, driving license, PAN card, voter ID, etc.
- Inability Status Proof – If you’re an NRI, you need to provide an NRE/NRO bank statement or a valid CRR certificate.
- Inability Proof of Income Proof – An income proof might be required if you’re an NRI.
- Inability Bank Statement of Liability – A bank statement of your liability is required only if you’re applying for a loan larger than ₹10 lakhs.
Check The Interest Rates And Fees
Before you get too excited about the loan amount you might be eligible for, find out the interest rate you’ll be charged and the fees that go with your Mudra loan. You can ask the co-merchant you’ve decided to work with and the lender about these rates and fees to find out more.
- The interest rate depends on the amount of the loan and the repayment period.
- The processing fee is the fee charged by the lender for processing your application and is non-refundable.
- The documentation fee is the fee for processing the necessary documents needed for the loan.
- The security charge is the fee charged by the lender for securing your loan.
Decide Which Co-Merchant To Work With
While you can apply for a Mudra loan from any co-merchant you choose, it’s important that you do your research first, in order to make sure that this co-merchant is a good fit for your needs. You can choose based on their region, specialties, type of loan, and interest rates and fees. A co-merchant is any institution that facilitates lending and borrowing activities related to Mudra loans. Co-merchants are authorized by the government, and you can apply for a Mudra loan from any of them.
Conclusion
We hope this guide has helped you learn how to apply for a Mudra loan and that you are now more informed about the process. Applying for a small business financial loan is not an easy process, but if you follow these steps, you’ll be well on your way to applying for a loan that will help you expand your business. Just don’t forget to also plan where you’ll use the loan’s funds as well!
