In a bid to enhance the availability of credit for startups and small businesses, the Pradhan Mantri Mudra Yojana (PMMY) was launched by the Indian government in 2015. The scheme provides financial support to micro and small enterprises, enabling them to access low-interest loans.
Key Features of PMMY
- Three Types of Loans Under the PMMY, startups can avail of three types of loans: Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh). This tiered approach ensures that businesses of all sizes can benefit from the scheme.
- Actionable Tip: Entrepreneurs should apply for the appropriate loan type based on the scale of their startup.
- Interest Subvention Startups benefiting from the PMMY are eligible for an interest subvention of 2% on their loans. This significantly reduces the financial burden on entrepreneurs, making it easier for them to manage their cash flow.
- Actionable Tip: Startups should ensure they meet the eligibility criteria to benefit from the subvention.
- Collateral-Free Loans One of the best features of the PMMY is the provision of collateral-free loans. This makes it easier for startups to access funds without having to pledge assets.
- Actionable Tip: This feature is especially beneficial for young entrepreneurs who may not have collateral but need financial support.
Impact on Startups
The Pradhan Mantri Mudra Yojana has empowered millions of entrepreneurs across India. Many startups in the retail, agriculture, and services sectors have leveraged this scheme to fund their growth and expansion.
Conclusion
PMMY is a game-changer for India’s startup ecosystem, providing easy access to financing for small businesses. With collateral-free loans and interest subvention, it offers a strong foundation for startups to expand and grow sustainably.