Complete Guide to Union Bank Mudra Loan
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Complete Guide to Union Bank Mudra Loan: Everything You Need to Know
What is a Mudra Loan?
Among various financial schemes and products across multiple banks. Union Bank of India Bank is also a provider of Mudra Loan under the famously known Pradhan Mantri Mudra Yojana (PMMY). The Yojana was introduced to bring credit facilities to self-employed individuals, professionals, and MSMEs via Bank facilities and other financial operations. The yojana mainly was introduced to extend a helping hand to businesses. The growth of entrepreneurial journeys in India was also a main factor highlighted.
The Mudra Loan allows a maximum loan of up to Rs.10 Lakhs with a repayment structure of up to 5 years. The interest rate offered by different Banks Under PMMY varies. It depends on the applicant’s profile, loan amount, and repayment timeline.
The loan interest of Union Bank of India is around 16% – 26% p.a. Depending on all the parameters of selection. Also, the loan can be applied online as well as offline.
Categories of Mudra Loans at Union Bank
Union Bank of India Bank offers different categories of Mudra Loan Scheme which apply to different applicants.
Shishu
The Shishu category is where the loan amount is up to ₹50,000. This category is specifically for small businesses, home-based businesses, street vendors, shop owners, and first-time entrepreneurs.
Interest Rate: 7.40 – 8.50% p.a. with repayment tenure of 5 years
For this loan application, no processing fee and collateral requirements are needed.
Kishor
For this category, the loan amount is from ₹50,000 to ₹5 lakh. The category targets small manufacturing units, service enterprises, established retail shops, Small-scale industries, professional service providers, and trading businesses
Interest Rate: 8.50% – 10.25% p.a.. with repayment tenure of up to 7 years
For loan applications, there are semi-customised repayment plans and digital banking support as well. The bank charges 0.50% of the loan amount as processing fees.
Tarun
The category deals with Loan amounts from ₹5 lakh to ₹10 lakhs. This is suitable for Medium-sized enterprises, manufacturing units, well-established service businesses, educational institutions, healthcare facilities, and IT service providers.
Interest Rate: 8.50% – 10.25% p.a.With repayment tenure up to 10 years
For a loan application, a detailed business plan is required and a bank statement of the last 2 years. The bank keeps 1% of the loan amount as a processing fee.
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Mudra Loan - Eligibility Criteria
The MUDRA Loan Scheme has significant eligibility criteria which have to be followed by every applicant. The individuals who follow the rules strictly will be provided with the scheme’s benefits.
The eligibility criteria for MUDRA Loan in Union Bank are as follows:
- Age requirements: The minimum age of the applicant has to be 18 years which goes up to 65 years.
- Eligible Business type: Individuals, business owners, Startups, women entrepreneurs, self-employed professionals, and MSMEs
- Income criteria: The applicant’s minimum annual turnover has to be Rs 1 Lakh and the maximum annual turnover for eligibility is Rs. 100 lakhs
- Credit score considerations: The minimum credit score required is 650 with no defaults in existing loans. (if any)
- Documentation needed: Detailed documentation is required for both new and existing businesses. This includes detailed project reports, market analyses, current market position, and financial projections for 3 years.
- Business plan requirements: The business preferably should be in the manufacturing, service, or trading sector. Minimum 3 years of experience in your business field. Businesses should be legally registered with government operations.
Documents Required For Mudra Loan
The loan application requires a certain list of documents that are required:
Personal Documents
- Identity proof: Aadhaar Card/ PAN Card/ Voter ID
- Address proof: Electricity/Water Bill (not older than 3 months)/ Rental Agreement/ Passport
- Age proof: Birth Certificate/ 10th Certificate
- Photographs: 2 recent passport-size photographs and One family photograph (for Kishor & Tarun categories)
Business Documents
- Business registration proof: Shop & Establishment Certificate/ Trade License/ MSME Registration/ Udyam Registration/ GST Registration
- Business address proof
- Bank statements
- Income tax returns
- GST returns (if applicable)
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Benefits of the Mudra Loan Scheme
Here are the top benefits of the mudra loan scheme provided by Union Bank of India Bank:
- Competitive interest rates – The different categories help business owners to choose the right loan for them.
- Negligible collateral requirement – In most cases, collateral is not required for loan approval.
- Flexible repayment options – there are different repayment tenures ranging from 5 – 10 years.
- Quick processing– The loan application procedure is quite swift.
- Minimal documentation – There is no need for a pile of documents.
- Digital application facility – The loan can be applied digitally, easily from your phone.
Tips for Successful Mudra Loan Application
Preparation checklist:
- Before applying, update your business registration documents.
- Organize the past 6 -12 months’ records and prepare your project’s file with plan projections.
- Don’t forget to check the validity of all ID proofs and ensure your PAN is linked with Aadhar
- Also, gather proof of your business existence, bills, and agreements.
Additional Support and Resources
The Union Bank is the right choice for the Mudra loan scheme because of the following reasons:
Competitive Interest Rates and Charges: The bank offers low interest rates compared to other banks, starting from 7% p.a.
Superior Digital Infrastructure: The in-depth digital application process and loan management
Quick Processing & Disbursement: The Bank offers a Fast-track approval system (3-7 days) and minimal documentation requirements.
Project Report @ ₹2,500/-
Get Project Report For Mudra Loan By CA & Experts @ Just ₹2,500/-
Conclusion
With the help of the Mudra loan Scheme, it has become accessible for all kinds of business owners to scale up their businesses at multidimensional levels. So, if you are looking to apply for a loan you can choose Union Bank of India for Mudra loans as an ideal option.