If you've been living your small business dreams and need some money an SBI Mudra loan can help. Ever heard of the advice “spend money to make money”? In the business world, this line carries great weight, especially for small businesses planning to take a big leap.
Since it takes a solid financial foundation to satisfy operational costs and seize business opportunities, owners often turn to small business loans to finance startup expenses or pay for expansions. The SBI Mudra Loan for small business is one of these loans.
This loan was created to help businesses in their modernization, startup, and expansion plans. They've also got competitive financing options. We've got more details up next on how you can get an SBI Mudra loan including fees and how to apply.
What Is A Mudra Loan?
Before we head straight into discussing the SBI Mudra Loan, let's talk about what a Mudra loan is. A Micro-Units Development and Refinance Agency (MUDRA) loan was introduced the Indian government to help. Specifically to help Micro, Small and Medium Enterprises (MSMEs).
Mudra loans are delivered to commercial banks, regional rural banks, small finance banks, and non-bank financial companies (NBFCs).
How Much Can I Get With An SBI Mudra Loan?
Created to help businesses finance their urgent business needs, the SBI Mudra Loan isn’t your typical small business loan. It is a financing option created to cater to businesses that are operating in the manufacturing, trading, and services sector.
Once availed, the SBI Mudra Loan can provide clients with up to Rs 10 lacs to be used for their modernization, expansion, or any business purposes. Specifically, under this offer, loans that score up to Rs.50,000 are categorized as SHISHU and are for new businesses.
- SHISHU - Loans up to Rs.50,000
- KISHORE - Loans from Rs.50,001 to Rs.500,000
- TARUN - Loans from Rs.500,001/- to Rs.10,00,000/
Meanwhile, loans that range from Rs.50,001 to Rs.500,000 are called KISHORE and they are for businesses that need some help. This help could be for improving business by expanding locations or increasing staff.
Lastly, those loans that range from Rs.500,001/- to Rs.10,00,000/- fall under the category called TARUN. This loan is for entrepreneurial startups.
What Are The Benefits Of This Loan?
One of SBI Mudra Loan’s main selling point includes its favorable margin loan. That loan comes in the form of a 10% margin for a loan amount ranging from Rs.50,001 to Rs.10 lakh. And nil for loans scoring up to Rs.50,000.
Aside from this, the loan also provides promising and flexible repayment periods, which could range from 3 to 5 years, with a moratorium of up to 6 months, depending on the client’s activity/income generation.
While other loans implement strict and, often, risky collateral security, the Mudra Loan, on the other hand, requires no collateral. That collateral is already covered under Credit Guarantee for Micro Units (CGFMU).
Since loans are guaranteed by the CGFMU, you can expect it to be for a term of five years. And the maximum period on that is 60 months.
What Are SBI Mudra Loan Fees
Interest
- Loans up to Rs.50,000 – Nil
- Loans from Rs.50,001 to Rs.10 lakh – 10%
Process Fee
- Shishu and Kishore loans – Nil
- Tarun loans – 0.5% of the loan amount
What Are The Requirments?
Applying for an SBI Mudra Loan is easy as the bank opens the offer to both new and existing clients. However, as a general rule, you must be at least 18 years old, and an Indian citizen.
You also need to have a business plan for a non-farm income-generating activity (manufacturing, processing, trading or service sector), and whose credit need is up to 10 lakh. Moreover, as part of its requirements, you must also be able to provide the needed documents for the application.
Typically, these include your proof of identity (Aadhaar, Voter ID, PAN, Driving License, etc.), proof of residence, and proof of business (business registration certificate, etc.). If you meet all the requirements, you are ready to apply.
How To Apply
Fortunately, the SBI offers an online registration service to interested customers. To start your application, you may simply visit the SBI official site, click on the “Business” option located between “NRI” and “Agricultural & Rural” options.
From there, the site will transport you to the bank’s business financing products. Click the “SME” option located at the sky-blue header and choose “PM Mudra Yojana.” Once the page is loaded, select “Apply Now” to start your application.
You will be asked to provide your personal information. Simply fill in the necessary boxes and answer the captcha text to submit your application. Wait for the result and see if your application has been approved by the bank.
Typically, when applying for a loan under the SHISHU category, expect that you will have to finish a one-page application format. Meanwhile, if you are after the KISHOR and TARUN category, you will need to complete a three-page indicative application format.
Other Services Related to the Loan
If you’re an existing SBI savings and current account holding customers, you may apply for the loan online at SBI e-Mudra Loan. To be eligible, you must be between 18 and 60 years of age, a micro-entrepreneur, and have a deposit account that has been active for at least six months.
Under this service, the maximum eligible loan amount scores to Rs.1.00 Lakh, with a maximum loan period of 5 years. Using the platform, customers can get a loan of up to Rs.50,000. However, you must directly visit an SBI bank to apply.
To start the application, you may simply visit the portal and apply directly. During the process, you will be asked to provide an electronic copy of the following.
i. Savings/Current Account number and branch details; ii. Proof of Business (Name, Start date & Address); iii. UIDAI- Aadhar Number (should be updated in A/c Number); iv. Community details (General/SC/ST/ OBC/ Minority); v. GSTN & UDYOG Aadhar, Proof of Shop & Establishment or Any other Business Registration document (if available).
All files must be in PDF/ JPEG / PNG format with a maximum size of 2MB.
How To Contact SBI
Still have inquiries regarding the bank’s Mudra Loan? Contact them as soon as you can. To do so, simply call them at 1800 11 2211 or 1800 425 3800 today or email them at customercare@sbi.co.in
For faster response, may also visit their Customer Care Department located at the State Bank Bhavan, 16th Floor Madam Cama Road, Mumbai 400 021.
The Bottom Line
Whether you’re set to launch a new project or expand, it's good to know what your options are. The SBI Mudra Loan has some good financing options and flexible payment plans and could be for you. But make sure you read everything about the loan before deciding.
