The State Bank of India (SBI) Mudra Loan refers to the loans given by the banks to Micro, Small & Medium Enterprises (MSMEs) under the guidance of the Micro-Units Development and Refinance Agency (MUDRA). Mudra scheme provides necessary finance to Small and Medium-sized Enterprises (SMEs) sector units. Mudra Loan by SBI is offered at attractive rates with low processing fee and easy repayment options.
SBI Mudra Loan can be used to meet various requirements that include capacity expansion, modernization, buying machinery, business expansion and business related purposes. SBI Mudra loans are offered to business enterprises in services, manufacturing and trading sectors.
SBI MUDRA Loan (PMMY) 2019
|Interest Rate||Depends on applicant’s profile|
|Loan Amount||Up to Rs. 10 lakh|
|Eligibility Criteria||Existing and New Units|
|Processing Fee & Charges||Nil for Shishu and Kishor to MSE Units|
For Tarun: 0.50%of the loan amount + taxes
|Pre-payment Charges||Between 3 – 5 years (moratorium of up to 6 months) depending on the activity / income generation|
|Margin||Up to Rs. 50,000 Nil and From Rs. 50,001 to Rs. 10 lakh is 10%|
|Residence Status||For last 2 years, residing in same society|
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the company and RBI. GST and service tax shall be levied extra on the mentioned charges
SBI Mudra Loan Eligibility
- Applicant must be engaged in a non-farm income generating activity, either in manufacturing or in the services sector
- Applicant must be an individual or a small business unit
- Applicant needs to submit a business plan and should have a credit requirement of not more than Rs. 10 lakh
- Applicant should not have defaulted on any loan availed earlier from any financial institution
Must Read: How to Apply for Mudra Loan Online?
|MUDRA Yojana Loan Amount|
|Shishu||Up to Rs. 50000|
|Kishor||Rs. 50000 – Rs. 5 lakh|
|Tarun||Rs. 5 lakh – Rs. 10 lakh|
The SBI Mudra Loan is a part of the Mudra loan scheme announced by the government to provide easy finance to SMEs and manufacturing units that undergoes the lack of readily accessible finance. The scheme is managed by Micro-Units Development and Refinance Agency (MUDRA), which is a wholly-owned subsidiary of Small Industries Development Bank of India (SIDBI). MUDRA has partnered with regional and state level banks, micro finance institutions and other lending institutions to close the gap between the government agency and the masses.
In addition to finance, MUDRA also offers credit guarantee for Mudra loans, acts as a technology enabler and provides developmental and promotional support. The financing is provided through four avenues:
- Through a Micro Credit Scheme (MCS) for loans up to Rs. 1 lakh, where the financing comes through micro finance institutions.
- Using a refinance scheme for commercial banks, regional rural banks and scheduled co-operative banks
- Through a women enterprise program
- By securitization of loan portfolio
The bank provides the SBI Mudra loan for working capital needs and as a term loan for various business needs. The maximum amount of loan that a micro or small business can apply for is Rs. 10 lakh. Businesses engaged in manufacturing or provisions of services are eligible for a CGTMSE guarantee, though the same is not provided to businesses engaged in retail trade. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) guarantees the loans given under the Mudra scheme to eligible applicants up to a certain specific amount.
State Bank requires the borrower to hypothecate (pledge) the stocks, machinery, movables, or any other items acquired with the money from the SBI Mudra loan with the bank for the tenure of the loan. The bank does not require any collateral from the borrower, as RBI has mandated that all loans up to Rs. 10 lakh to the MSE sector will not need any collateral.
Documents Required for SBI Mudra Loan
The following documents have to be submitted for a Kishor or a Tarun loan:
ID Proof: The borrowers have to provide a self-certified copy of any one of the following documents: Voter’s ID card, Driving License, PAN Card, Aadhaar Card, Passport or Photo IDs issued by a Government authority.
Residence Proof: These may include any one of the following documents: recent telephone or electricity bill, property tax receipt, Voter’s ID card, Aadhaar Card, Passport, and Certificate issued by a government authority, local Panchayat or municipality, among others.
Bank Statement: The SBI Mudra loan borrower has to provide the last 6 months’ bank statement from their existing bank, if any.
Price Quotations: The application should be accompanied by the quotation for the machinery and other items that have to be bought for the business.
Photograph: Applicants have to provide two copies of their recent photograph. The photo must not be older than 6 months.
Category of Person: The borrowers must also submit proof of them being part of an SC, ST, OBC, or minority group, if applicable.
Business ID and Address: These may include copies of relevant licenses, registration certificates, and lease or rent agreements, or other documents that are establish the ownership, identity and address of the business unit. Businesses with Udyog Aadhaar Memorandum can submit the same also.
Sales Documents: Existing units have to provide details of sales for the current financial year. The data should be up to date (i.e. up to the date of submission of the application).
a.) Historical Balance Sheet and Tax Returns: The applicant must submit the last two years unaudited balance sheets of the existing units along with the income tax or sales tax returns, among others.
b.) Projected Balance Sheet: The borrowers also need to submit the projected balance sheet of start-ups or existing units for one year for working capital requirements or for the period of the loan in case of a term loan.
Quotations: The application should be accompanied by the proforma invoices or quotations for the assets that have to be bought. Estimates for any civil works, if any are to be undertaken, are also required. In addition, technical feasibility and economic viability aspects may be discussed by State Bank with the applicant, if deemed necessary.
Asset and Liability Statements: The asset and liability statements of the borrower including directors or partners in case of a company or a firm, respectively, have to be submitted along with the application.
Memorandum and Articles / Partnership Deed: The memorandum of association and the articles of association in case of a company or the partnership deed in case of partners are also needed with the application.
Photograph: Applicants (whether proprietors, directors or partners) have to provide two copies of their recent photograph. The photo must not be older than 6 months.
Types of SBI Mudra Loan
The SBI Mudra loan like all other Mudra loans is sectioned into three types, such as Shishu, Kishor and Tarun. Each of these types of SBI Mudra loan has its own criteria and guidelines, in addition to the loan amount.
Shishu Loan: Also called the child category of SBI Mudra loan, the financing under this debt product is meant to help micro units and small business owners get started with their business. The loan amount is up to Rs. 50,000, and there are no processing charges. Applicants for the Shishu SBI Mudra loan have to provide their business plan when they submit their application.
Kishor Loan: The SBI Mudra loan under the Kishor segment is meant for small businesses that have started their operations but need funds to grow the enterprise. SBI provides a loan of Rs. 50,000 to Rs. 5 lakh under this category. The borrowers must provide the necessary documentary evidence to show the status of the business when they submit the application for the Kishor loan. There is a processing charge of 0.50% of the financed amount for these SBI Mudra loans.
Tarun Loan: Business owners can apply for an SBI Mudra loan from Rs. 5 lakh to Rs. 10 lakh under this category. This SBI Mudra loan is given to businesses that need the larger funding to grow and / or establish their business. The processing fees are same as that for Kishor loans (0.50% of the loan amount), and the same interest rates apply as for the other two categories.
Also Read: Is there any Subsidy for a Mudra Loan?
SBI Mudra Loan Tenure
The tenure of the SBI Mudra loan depends on the purpose for which the financing was provided by the bank. If it was for the working capital requirements (fund-based), the SBI Mudra loan is repayable on demand. However, for term loans for all other business purposes, the SBI Mudra loan has a repayment period of 3 to 5 years. This tenure includes the moratorium of up to 6 months given by the bank to the borrower.
Frequently Asked Questions (FAQs)
Ques. Who can apply for an SBI Mudra loan?
Ans. Any micro or small business owner can apply for an SBI Mudra loan. The owners can be proprietors, partners or directors in the business.
Ques. What are the interest rates for the SBI Mudra loan?
Ans. The interest rates offered by SBI Mudra loan starts from 11% and onwards.
Ques. What is the repayment timeline for an SBI Mudra loan?
Ans. The funds for working capital are payable on demand while that for term loans have a 3 to 5 years repayment tenure. The moratorium period of up to 6 months is covered under the period of 3 to 5 years.
Ques. Can people in urban areas apply for an SBI Mudra loan?
Ans. Yes. People in urban areas can apply for an SBI Mudra loan.
Ques. What is a Mudra Loan Card?
Ans. Mudra Loan Card, more commonly known as a Mudra Card, is a credit card that has a credit limit up to the working capital portion of the SBI Mudra loan. It can be used as a debit-cum-ATM card and also at POS terminals to make purchases for the business.
Ques. Is there any subsidy provided under Mudra loan scheme?
Ans. No, there is no subsidy provided under Mudra loan scheme.
Ques. What is the maximum loan amount offered under Mudra loan scheme?
Ans. The maximum loan amount offered under Mudra loan scheme is Rs. 10 lakh.
Ques. Does NBFCs also provide Mudra loans?
Ans. No, only banks are authorized to provide Mudra loans. Government of India does not provide permission to NBFCs to provide Mudra loans. However, they can provide SME and MSME loans.