Empowering Small Businesses: Government Increases Mudra Loan Limit to ₹20 Lakh

The Indian government has recently increased the Mudra loan limit from ₹10 lakh to ₹20 lakh, a move that could greatly benefit small and medium-sized businesses. This change is set to provide much-needed financial support to businesses across the country, helping them grow and thrive. In this blog, we’ll break down what this means for small businesses and how entrepreneurs can take advantage of this opportunity.

1. What Are Mudra Loans?
2. Eligibility Criteria for a ₹20 Lakh Mudra Loan
3. How to Apply for Mudra Loans: The Updated Process
4. How to Prepare a Project Report for Mudra Loan
5. Additional Government Initiatives Supporting MSMEs
6. Future Outlook for MSMEs

Mudra loans, part of the Pradhan Mantri Mudra Yojana (PMMY), are designed to help small businesses in India by providing easy access to credit. Launched in April, 2015, this scheme has been a lifeline for many, offering three types of loans:

Shishu: Loans up to ₹50,000 for new businesses.

Kishore: Loans between ₹50,000 and ₹5 lakh for businesses looking to grow.

Tarun: Loans from ₹5 lakh to ₹10 lakh, now increased to ₹20 lakh, for established businesses needing more capital.

The recent increase in the Tarun loan limit means that businesses can now access even more funds to expand. On July 23, the Union Finance Minister announced that, as part of the nine key priorities for the 2024 Union Budget, the Mudra loan limit for those who have successfully repaid previous loans under the Tarun category will be increased from ₹10 lakh to ₹20 lakh.

Those business owners who have availed and successfully repaid loans previously taken under the Tarun category can apply for a loan up to ₹20 Lakhs under the Mudra scheme.

In other words, if you are taking a Mudra Loan for the first time, then the first loan that you can get is up to ₹10 Lakhs, once you repay this loan properly, you can then apply for a higher value loan of ₹20 Lakhs for business expansion.

Even with the higher loan limit, applying for a Mudra loan remains straightforward. Here’s what you need to know:

Eligibility: Mudra loans are available to Indian citizens with a business plan for a non-farm income-
generating activity, such as manufacturing, trading, or services.

Documentation: You’ll need to provide a detailed business project report for the bank loan, along with ID proof, address proof, and proof that your business is running. For larger loans, additional documents might be required.

Repayment Terms: The repayment period can be up to 7 years, with interest rates varying depending on the loan amount and the lending bank. However, Mudra loans interest rate are generally lower than other bank loans.

Where to Apply: Mudra loans can be obtained from banks, microfinance institutions, and non-banking financial companies (NBFCs) across India.

Know more about Pradhan Mantri Mudra Yojana (PMMY)

Creating a strong business project report is crucial when applying for a Mudra loan. This report should outline your business plan, market opportunities, financial projections, and how you plan to use the loan. Making such a report requires financial expertise as the Project Report needs to be accurate, detailed, and in line with the stringent requirements of banks.

The Modern Solution: Prepare your Project Report for Mudra Loan with our online software in just a few simple steps. By simply inputting a few key details about your business, our advanced software will automatically prepare a report that meets the standards expected by banks for Mudra loan applications.

With Fortrisk Consulting, there’s no need to rely on costly professionals. You can confidently create your best Project Report by following the below simple steps:

Step 1: Log in to our website & click on Project Report & CMA for New Business Option (If you are already running a business then click on Project Report & CMA for Existing Business Option and follow the steps provided in this article)

Step 2: On 1st page enter your business details like business name, address, loan tenure, etc, and click next. On the 2nd page enter the owner’s name, address, etc, and enter the number of employees to be hired.

Step 3: On the 3rd page enter the Initial Project Investment details, mainly the Capex costs like Machinery, Computer, Furniture, etc. Also enter the working capital amount here which is the money needed for daily expenses like stock purchase, salary, rent, etc.

Step 4: On the 4th Page enter the breakup of the monthly expenses that you will incur, like stock purchase, rent, salary, etc.

Step 5: That’s it, our online software will automatically make a complete Project Report based on the data provided. Click the download button & check your Report values. You can also edit various report values like sales, loan interest rate, etc. by clicking the edit button & download a revised report as per your or your bank’s requirements.

The increase in the Mudra loan limit is part of a larger government effort to support small businesses. Other initiatives include:

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):
This program encourages banks to lend unsecured loans as high as Rs 5 crores to small businesses by providing credit guarantees.

Stand-Up India Scheme: This scheme supports entrepreneurship among women and marginalized communities with loans between ₹10 lakh and ₹1 crore.

Digital MSME Scheme: This initiative helps small businesses adopt digital tools and technology to compete in the digital economy.

With Fortrisk Consulting’s online project report software, you can make a detailed and accurate project report in minutes for any loan scheme. Watch our easy step-by-step video here to learn how to easily make your Project Report with our online software

The increase in the Mudra loan limit to ₹20 lakh shows the government’s strong commitment to supporting small businesses in India. With more funds available, we can expect to see more innovation, job creation, and overall economic growth. So grow your business today by applying confidently for a Mudra Loan with Fortrisk Consulting by your side.