Frequently Asked Questions : How to Set Up a New Business / Enterprise, and for Availing MUDRA Loan

1. How well do I plan and organize?
2. Am I willing to take risks?
3. Do I get along well with others?
4. Can I make good decisions?
5. Do I have the physical and emotional strength to run a business?
6. Can I maintain my motivation?
7. Do I enjoy confidence of my co-workers
8. Do I like to work alone?
9. Can I work alone in crisis hours?
10. Can I blend the business life with family, social life?

1. Planning ability to objectively assess things
2. Industry experience and /or support
3. Money management skills
4. Technical experience and or support
5. Focus on Customer / buyer needs
6. Leadership & Team playing

All of these qualities are important for success in business. Be honest in making an assessment of your talents, skills, and experience, and look for the ways to compensate your weak areas, such as taking skills training Entrepreneurship Development Program classes, reading, learning from others in similar business, finding a mentor, hiring of capable persons, and adding a partner with the necessary skills, or outsourcing for contracting for the needed help.

1. Now your task is to decide what kind of business you want to start, because you only can decide which business is best suited for you.
2. Next comes to explore potential markets for your product / service, and ways to use your skills and interests in the business.
3. Next comes to explore potential markets for your product / service, and ways to use your skills and interests in the business.
4. Check with potential customers to find if they are willing to pay for the product / service, at the price / cost offered by you. It enhances chances of your success, when you match a product / service with available or potential markets.

1. Now, the right step for you is to have a do-able business idea, and choosing a name and location for the business; registering it with the proper authorities; obtaining necessary licenses and permits; and developing production schedules, marketing and pricing plans.
2. Take your time and plan carefully. Do not rush the process or skip any of the important steps / tasks, because business has to be sustainable in long run.

1. You can start as a sole – proprietorships firm, the simplest of all types. Here the business income is treated as personal income for tax purposes, but a significant disadvantage is that you as the owner, assumes personal liability for the actions of the business, whereas a one person / director company has safeguards from such liability.
2. It gives you many additional advantages as a legal entity making it simpler to contract on behalf of your business. A digital signature is also essential & helps in making online business transactions easier and for filing of various statutory compliances of taxes etc. Having an Aadhar no. can be much better for you. In case of need, you can obtain expert legal and accounting advices to help determine the best legal framework for your business.

Acquiring permits and licenses anywhere involves certain issues: named below:-

• 5.1(a)Things to do before registration
  1. A Regd. Name and Place of business,
  2. Personal and Residential Identification issues
  3. Licensing and Statutory Permits regulations.
• 5.1(b)Things to do after registration
  1. Allotment of land in industrial estates or fixing a commercial site
  2. Sales and Service taxes registrations.
  3. Industry type / Business Sector Identification numbers.
• Licensing and permitting regulations vary with the type of business and are subject to the State / Central govt. rules where the business is located. While licensing requirements of some businesses is easy, in case of some others these are tightly controlled..
• Do not just start the business without knowing the necessary rules of permit issue or waiver, or the fees etc., but you cannot run the risk of facing fines, or closure of your business soon after start, because as owner you may face civil and /or criminal penalties.

Sales happen because of marketing. Businesses use market research to identify their customers and ascertain what they want to buy. And what satisfies them most. Marketing involves six issues, which are as under:-

1. 1. Product : what are you producing and what benefits does it offer to customer?
2. 2. Process : how is it produced, at what cost and rate, and what raw materials and time frame it takes?
3. 3. Price : at what price can the product or service be sold ?
4. 4. Promotion : how will potential customers know about the product or service ?
5. 5. Place : where is the business located and what distribution channels will be used?
6. 6. Perception : how should the customer see the business and the product or the service provided to him?

• A business plan is the firm's résumé and lists its goals and objectives. Develop a business plan as much for yourself as for the partners, investors, and bankers involved with the business.
• Business plans have Four distinct uses:
  1. The prospect of its feasibility and success as per marketing plans;
  2. The day to day operating (methodologies) plans for financial needs, production schedules, and marketing goals;
  3. The management tools to secure loans or outside capital borrowed.
  4. The risk mitigation in business due to any future shifts in market behaviour.
• In the development of business plans, some of the practicing CA’s / CS’s, and vocational technical training schools or govt certified institutes consultants help can be obtained on payment of fees. Many colleges have business incubators and a Mentor Support network is also in offing under Ministry of Skill Development & Entrepreneurship, Govt of India.

Using your personal funds is the first step in financing of business, as it is an indicator of how serious you are about the business and you are willing to risk your own savings in the proposed business This makes the lender confident of your ability to manage risk including your personal money and it conveys your confidence into investors. Business loans can be obtained from several sources, such as PSU & Private (commercial) banks, finance companies, MFI’s, Venture Capital, PE, and Angel fund, firms, and some insurance companies..

• Business documents such as the filing of business name, incorporation /partnership papers, Memorandum and Articles of associations, Minutes of board meetings, Resolutions, MCA returns filing, Sales tax & Service tax permits, numbers, and insurance records must be retained till their required periods. Some of these records, such as incorporation papers and tax permits, must be kept according to their tenure even after the business closes.
• For yearly tax returns, revenue people may want to keep the records as they prescribe and all those involving property must be kept for the entire time the property is owned. The records needed to manage the business and the records required by the banks for revenue authorities may differ. While the business owner is interested in where and how income is generated, and where expenses are incurred, the revenue authority requires records that will allow for the preparation and documentation of a completed tax return on all kinds of such dues.
• However, it is necessary that all basic financial records of a businesses is kept with respective journals and ledgers, at the regd./office or shop as a check-books register, bill books, challans, accounts receivable, accounts payable, records of sales, inventory, cash receipts, and cash disbursements. for inspection by bank official. Records must also document expenses on transport, statutory dues as & when they fall due and the, fees, electricity, repairs, maintenance, advertising & all other expenses on entertainment etc.

• These questions represent the must to do and get ready before starting and setting up a business enterprise, as it can affect a potential business and what problems may arise at a later period.
• In case of some businesses the owners may also need to answer need for insurance, intellectual property issues, employee engagement issues, and hiring independent contractors.

Under the aegis of Pradhan Mantri MUDRA Yojana, three loan products have been launched and are known as 'Shishu', 'Kishor' and 'Tarun' to signify the stages of growth/ development and funding needs of the beneficiary of micro unit / entrepreneur and also provide a collateral free loan for sure. The three variants are
MUDRA Yojana operates as a refinancing institution through State / Regional level Intermediaries. MUDRA's delivery channel is conceived to be through the route of refinance primarily to NBFCs / MFIs, besides other intermediaries including Banks, Primary Lending Institutions etc.
A large number of 'Last Mile Financiers' in the form of companies, trusts, societies, associations and other networks are already providing informal finance to small businesses.

Non – Corporate Small Business Segment (NCSBS) comprising of millions of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.

Yes, MUDRA will be extending refinance support to RRBs for enhancing their liquidity.

MUDRA will be a refinancing agency which will extend its funds to Last Mile Financiers to enable them to reach out to the sector. Access to finance in conjunction with rational price is going to be the unique customer value proposition of MUDRA. It will use a variety of innovative financing means to bring down the cost of funding for the ultimate borrower.

Yes. MUDRA will offer smaller loans upto 50,000/ under the 'Shishu' category and beyond 50,000 and upto 5 lakh under the 'Kishor' category. These products have been designed to cater to customers operating at the lower end of the enterprise spectrum. The loans will be extended through MFIs, NBFCs, Banks etc.

MUDRA offers smaller loans upto 50,000/ under the 'Shishu' category and beyond 50,000 and upto - 5 lakh under the 'Kishor' category. It also offers loans beyond 5lakh and upto 10 lakh under the Tarun category. Depending on your nature of business project requirement you can access finance from one of the intermediaries of MUDRA as per the norms.

Food Processing is an eligible activity for coverage under one of the MUDRA schemes. You can avail assistance under MUDRA schemes as per your requirements.

You can avail assistance under the ‘Shishu’ category of Micro Credit Scheme of MUDRA through any of the MFIs operating in your region for setting up your own enterprise.

You can avail assistance under the ‘Shishu’ category of Micro Credit Scheme of MUDRA through any of the MFIs operating in your region for setting up your own enterprise.

MUDRA operates a special scheme 'Business loans for Traders and Shopkeepers'. You can avail the facilities under the scheme as per your requirements.

What help can I get from MUDRA? You can avail assistance under the 'Shishu' category of Micro Credit Scheme of MUDRA through any of the MFIs operating in your region for setting up your own enterprise.

Pradhan Mantri Mudra Yojana (PMMY) loans are offered by all Public Sector Banks,Private Sector Banks, Foreign Banks, select Regional Rural Banks and Cooperative Banks, Micro Finance Institution, and Non Banking Finance Companies. All loans upto a loan size of 10 lakh provided for non farm sector income generating activities since April 08, 2015 is treated as PMMY.

Monitoring of PMMY will be done at the State level through SLBC forum and at national level by MUDRA / Department of Financial Services, Govt. of India. For this purpose, MUDRA has developed a portal, wherein the banks and other lending institutions directly feed their achievement details which is consolidated by the system and reports are generated for review.

Pradhan Mantri MUDRA Yojana (PMMY) is a Govt. of India Scheme, which enables a small borrower to borrow from banks, MFIs, NBFCs for loans for non-farm income generating activities. Generally, loans upto10 lakh issued by banks under Micro Small Enterprises is given without collaterals.

Carpentry and RO water plant installation, on a business mode, are eligible activities under MUDRA loan, if the loan amount is below 10 lakh. The primary requirement for being a MUDRA loan is to be a income generating activity under manufacturing, processing, trading and service sector and the loan amount is below 10 lakh.

Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than 10 lakh can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY). The usual terms and conditions of the lending agency may have to be followed for availing of loans under PMMY. The lending rates are as per the RBI guidelines issued in this regard from time to time.

There is no subsidy for the loan given under PMMY. However, if the loan proposal is linked to some existing Government scheme, wherein the Government is providing capital subsidy, it will be eligible under PMMY also.

MUDRA which stands for Micro Units Development and Refinance Agency Ltd. is a refinance agency and not a direct lending institution. MUDRA provides refinance support to its intermediaries viz. Banks / Micro Finance Institutions / Non Banking Finance Companies, who are in the business of lending for income generating activities in the non farm sector in manufacturing, trading and services sector and who in turn will finance the beneficiaries.

Yes a Rupay card will be issued to borrowers for their day to needs of cash drawals within the limit allocated in their loans and they can also deposit the daily cash sales also.

Yes. It is available for SHG’s also.