MUDRA Loan Subsidy: Percentage, Amount and Process to Apply Online

The Pradhan Mantri MUDRA Yojana (PMMY) is a flagship scheme that provides financial support to non-corporate, non-farm small and micro-enterprises. A common question among applicants is about the availability of a MUDRA Loan subsidy. The MUDRA Loan subsidy is part of the efforts by the government to aid small businesses in India. It connects to the PMMY, which offers loans up to ₹20 lakh without collateral. Entrepreneurs seek details on MUDRA Loan subsidy percentage, amount and online application to support growth.

What is the MUDRA Loan Subsidy?

MUDRA Loan subsidy refers to financial aid under PMMY that reduces the cost of loans for microenterprises. Launched in 2015, the scheme targets non-corporate, non-farm businesses in manufacturing, trading and services. Subsidies on MUDRA Loans often take the form of interest relief or linked programs, rather than direct cash grants. PM MUDRA Loan subsidy aims to boost self-employment and include underserved groups. Government intent focuses on MSMEs facing credit gaps, with loans classified as Shishu (up to ₹50,000), Kishore (₹50,001 to ₹5 lakh), Tarun (₹5 to ₹10 lakh) and Tarun Plus (₹10 to ₹20 lakh).

This support promotes economic activity. Borrowers gain easier access to funds for expansion or startup needs. The Pradhan Mantri Mudra Yojana (PMMY) plays a vital role in driving financial inclusion across India.

Also Read: Tarun MUDRA Loan: Limit, Interest Rate and Eligibility

Subsidy Under MUDRA Loan - Complete Overview

MUDRA Loan subsidy details show no fixed direct percentage under the core PMMY. Instead, related schemes provide relief, such as 2% interest subvention on Shishu loans for prompt repayment over 12 months. The subsidy on MUDRA Loans varies by category and linked initiatives, such as the Credit-Linked Capital Subsidy Scheme (CLCSS) for tech upgrades. PM MUDRA Yojana subsidy emphasises affordability through lower effective rates.

Note: Amounts depend on lender policies. Check the latest updates, as figures change. No uniform MUDRA Loan subsidy percentage exists; benefits are tied to performance.

Also Read: Everything you need to know about Business Loan

Eligibility Criteria for MUDRA Loan Subsidy

Under the Pradhan Mantri Mudra Yojana (PMMY), subsidies for MUDRA Loans apply to eligible non-farm micro units engaged in income-generating activities in manufacturing, trading, or services, with priority given to women, SC/ST/OBC entrepreneurs, and startups.

Checklist:

• An Indian citizen aged 18-65 years.
• Viable business plan with no defaults.
• Ownership proof for women/marginalised groups.
• Basic documents: Aadhaar, PAN, bank statements, business proof.

MUDRA Loans subsidy is available across India, encompassing both rural and urban areas, with lenders ensuring full compliance.

How to Apply for MUDRA Loan Subsidy Online

Since the subsidy is not a direct component of the MUDRA Loan, the application process involves applying for the loan first and then seeking benefits under a separate, applicable scheme.

Here is a step-by-step guide:

1. Prepare a Business Plan: Create a detailed report outlining your business activity, financial projections and how the loan will be utilised.
2. Approach a Lending Institution: Visit the nearest branch of a bank, NBFC or Micro Finance Institution (MFI) that offers MUDRA Loans. You can also apply online through the UdyamiMitra portal.
3. Submit the Loan Application: Fill out the MUDRA Loan application form and submit it along with all required documents, including identity proof, address proof and business registration details.
4. Inquire About Subsidies: Once your loan is sanctioned, discuss with the officials of the lending institution any applicable interest subvention or capital subsidy schemes, such as CLCSS.
5. Apply for the Subsidy Scheme: If you are eligible, the lending institution will guide you on the separate application process for the relevant subsidy scheme. Processing and final sanctioning of the subsidy is handled by the relevant government department, not the lending institution. This may require additional documentation specific to that scheme.

Benefits of Availing Subsidy or Related Support on MUDRA Loans

Securing a subsidy or related financial support with your MUDRA Loan offers several advantages:

• Reduced Interest Burden: Interest subventions directly lower your monthly payments, improving the cash flow of your business.
• Lower Capital Cost: A capital subsidy reduces the overall project cost, making investments in machinery or technology more affordable.
• Improved Repayment Capacity: With a lower financial outflow, it becomes easier to manage repayments, reducing the risk of default. You can use aBusiness Loan EMI Calculator to estimate your monthly payments.
• Encourages Entrepreneurship: These benefits make it more attractive for aspiring entrepreneurs, especially women and individuals from marginalised communities, to start their own ventures.

Common Myths & Challenges Regarding MUDRA Loan Subsidies

Several myths and practical challenges exist regarding the MUDRA Loan subsidy.

Myths:

• Every MUDRA Loan gets a subsidy.
  This is incorrect. There is no automatic, direct subsidy. Benefits come from linked schemes.
• The subsidy is a direct cash payout.
  Most benefits are in the form of interest subvention or capital subsidies applied to the loan account, not cash in hand.

Challenges:

• Lack of Direct Subsidy: The absence of a built-in subsidy in PMMY is a primary point of confusion.
• Complex Eligibility: Meeting the criteria for both the MUDRA Loan and a separate subsidy scheme can be difficult.
• Documentation Delays: The need for extensive paperwork for both applications can lead to significant delays.
• Limited Awareness: Many applicants are unaware of the existence of related schemes, such as CLCSS and how to apply for them.

Tips to Maximise MUDRA Loan Subsidy & Related Benefits

To make the most of the financial support available, consider the following tips:

• Choose the Right Category: Apply under the Shishu, Kishore or Tarun category based on your genuine business needs.
• Maintain a Good Credit History: A clean credit record enhances your credibility and increases your chances of approval for both the loan and any linked benefits.
• Prepare Accurate Documentation: Ensure all your documents are complete and accurate to avoid processing delays.
• Research State-Specific Schemes: Some state governments offer additional subsidies for small businesses. Research and apply for these if you are eligible.
• Follow Up Regularly: Stay in touch with your lending institution to track the status of your loan and subsidy application.

Final Thoughts

Understanding the specifics of the MUDRA Loan subsidy is important for any entrepreneur looking to benefit from the PMMY scheme. While there is no direct subsidy, awareness of the MUDRA Loan subsidy percentage and the details available through linked schemes can provide substantial financial relief.

Apply now for a Business Loan.

FAQs

Q.1. Is there any direct subsidy on MUDRA Loans under PMMY?

A. There is no direct subsidy offered on loans under the Pradhan Mantri MUDRA Yojana (PMMY). However, borrowers may be eligible for benefits under other government schemes, such as interest subvention or capital subsidies.

Q.2. What percentage of subsidy can a MUDRA Loan borrower expect?

A. The subsidy percentage varies depending on the linked scheme. For instance, the Credit Linked Capital Subsidy Scheme (CLCSS) offers a 15% capital subsidy for technology upgradation, while some interest subvention schemes offer a 2% reduction in interest rates.

Q.3. Can women entrepreneurs avail special subsidies on MUDRA Loans?

A. While there is no exclusive subsidy for women, they are a priority group under PMMY. Many lending institutions offer them loans at concessional interest rates and they may receive preferential treatment under various government support schemes.

Q.4. What documents are mandatory to avail any subsidy on a MUDRA Loan?

A. Common documents include identity proof (Aadhaar, PAN), address proof, business registration certificates, a detailed project report and bank statements. Additional documents may be required depending on the specific subsidy scheme.

Q.5. How long does it take to get MUDRA Loan subsidy benefits after loan approval?

A. The timeline varies. Interest subvention benefits are often applied to your account periodically. At the same time, capital subsidies like CLCSS can take several months to be processed and disbursed after the loan is sanctioned and utilised.

Q.6. Are there state-wise differences in MUDRA Loan subsidy availability?

A. Many state governments offer their own subsidy schemes for MSMEs, which can be availed in addition to central government schemes. It is advisable to check the official websites of the industries department of your state for details.

Disclaimer:

The content presented on this page, including images and factual information, is intended solely as a summary derived from publicly available sources. GHFL/GFL (“Company”) does not claim ownership of such information, nor does it represent that the Companies have exclusive knowledge of the same. While efforts are made to ensure accuracy, there may be inadvertent errors, omissions, or delays in updating the content. Users are strongly encouraged to independently verify all information and seek expert advice where necessary. Any decisions made based on this content are solely at the discretion and responsibility of the user. Godrej Capital and its affiliates assume no responsibility for any loss or damage that may result from the use of or reliance on the information provided herein.