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Introduction

MUDRA Loans are micro loans, available under Pradhan Mantri Mudra Yojana (PMMY), targeted for the MSME sector in order to relieve them from the hassles of liquidity crunch. These loans are therefore made easily and promptly available at the same time widely accessible by connecting with various lender partners all over the country.

The loans under this scheme can be categorized under three types of loan schemes on basis of the stage of the business enterprise as well as the quantum of loan that is required by the borrower. The maximum loan under the PMMY is Rs. 10,00,000 and can be applied under the Tarun Scheme.

As any other business loans, the Mudra loan also requires the borrower to provide a project report at the time of application. The project report is a crucial part of the documentation required to process the application and sanction the loan.

The details of the project report required under for Mudra Loan are discussed hereunder.

What is a Project Report?

As mentioned, Mudra Loans, like any other business loans require the project report to be furnished for applying a loan under the Kishor or Tarun category. Loans under the Shishu Scheme are the most easily available loans to the small businesses and usually do not require the borrowers to present the project report along with the application.

A project report is the document that provides the details of the business. It also provides a detailed cost benefit analysis of the proposed expenditure for which the business loan is sought. It provides the viewers of the report a detailed idea of the project cost, scale of activities (proposed and existing), existing debt (if any), revenue projections, etc.

The project report should be complete and with valid data so as to be easily accepted and approved for sanctioning of the loans under PMMY.

What are the Contents of the Project Report?

The key contents of the project report are the cost benefit analysis of the proposed expenditure along with the basic details of the business and the entrepreneur. Following are some of the contents of the project report that are generally required by lenders for disbursal of the mudra loans.

  • General business details or business profile like area of business and products/ services of the business, duration of existence, achievements, etc.
  • Central objectives or aim of the business enterprises. 
  • Target of the business enterprise.
  • Budget of the proposed business expenditure and the investment required for the same.
  • Duration of the business project, if specific.
  • Details of the plant and machinery or equipment required for the proposed business growth or sustenance as well as the ancillary parts that may be required thereof.
  • Quotations from 2 or more sellers of such plant and machinery or equipment required as well as the parts required.
  • Detailed plan of the execution of the proposed activities.
  • Types of manufacturing processes to be involved in execution of the proposed activities.
  • Information related to employee details like the strength as well as skills or area of expertise that may be crucial in the execution of the proposed activities.
  • Transportation cost and partner details that would be part of the business expenditure.
  • Marketing and promotional planning and strategies involved in execution of the project and the products developed.
  • Third party participants involved in the execution of the project (if any).
  • Payback period of the business expenditure including the details of Net Present Value (NPV) and IRR (Internal rate of Return) if possible.
  • Business revenue projections.
  • Conclusion of the project report.

Given above is not an exhaustive list of the project report needed by the lenders. Many lenders may have specific requirements related to the project reports and the same can be sought by taking the help of a professional in the preparation of the project report.

The main requirement in this regard is that the project report has to be complete and factual otherwise it can lead to the rejection of the loan application. This will in turn harm the credit score of the applicant. Hence, the project reports have to be made with utmost care and as per the required lender guidelines.

The lenders will scrutinize the project report with a fine comb and hence all the details provided by the applicants may be verified by experts.

Benefits of Mudra Loans

Some of the benefits of the Mudra loans are mentioned below.

  • Easy access to loans up to Rs. 10,00,000
  • Collateral free loans
  • Lower interest rate as compared to other business loan products 
  • Comfortable repayment tenure up to 5 years (& years in certain cases)
  • Flexible repayment options as per lender terms
  • Revised definition of the MSME sector which provides a wide scope of eligibility under Mudra Loans thereby benefiting more and more small and medium businesses.
  • Interest subvention of 2% to Shishu Loans under PMMY.

FAQs – Project report Mudra Loans

1. Is the project report a mandatory requirement under the Mudra Loans?

The project report is not a mandatory requirement for Shishu Loans but for Kishor and Tarun Schemes it is mandatory.

2. Is there a specific format for the project report under PMMY?

No, there is no specific format stated under PMMY regarding project reports.

3. What is the maximum tenure of loans under PMMY?

The maximum tenure of loans under PMMY is 5 years. This tenure can be further extended to 7 years (maximum) depending on the lender and the borrower’s profile.

4. Who prepares the project report?

Project report can be prepared by the Business entrepreneurs or they can hire experts for the same.

5. What is the maximum loan available under the Kishor scheme of Mudra Loans

The maximum loan available under Kishor Scheme of Mudra Loans is Rs. 5,00,000.

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