Dairy farming is an important source of livelihood for millions of people in India. The sector has huge growth potential with an increasing demand for milk and milk products. However, lack of finance often hinders the progress of dairy farmers. The Indian Government has launched the Pradhan Mantri Mudra Yojana (PMMY) to address this issue by providing affordable credit to small and micro-enterprises.
Below we learn about Mudra loans, the eligibility required for Mudra Loan, Mudra loan eligibility documents needed for new business, and a step-by-step guide on how to apply for a Mudra loan.
Mudra Loan for Dairy Farm in India
Understand the PMMY Scheme
The PMMY scheme aims to provide financial assistance to small and micro enterprises, including dairy farming, through loans up to Rs. 10 lakhs. The loans are provided through various financial institutions such as banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs). Based on the loan amount, the loans are divided into three categories, namely Shishu, Kishor, and Tarun.
Eligibility Criteria
- You should be a citizen of India.
- You should be engaged in dairy farming as a primary business activity.
- You should have a clear business plan with a marketable product or service.
- You should have a good credit history and repayment capacity.
- You should not have defaulted on any previous loans.
Prepare a Business Plan
- Business overview: Briefly describe your dairy farming business and your products or services.
- Market analysis: Analyze the demand and supply of dairy products in your area and identify your target customers.
- Production plan: Describe your production capacity, the number of cows or buffaloes you own, and the daily milk production.
- Financial projections: Estimate your income and expenses, including the cost of raw materials, labor, and marketing expenses. Also, include your projected cash flow, profit and loss statement, and balance sheet.
Identify the Loan Amount and Category
You need to identify the loan amount and category based on your business plan and financial requirements. The loan amount can range from Rs. 50,000 to Rs. 10 lakhs, depending on the loan category.
- Shishu: Loans up to Rs. 50,000
- Kishor: Loans from Rs. 50,000 to Rs. 5 lakhs
- Tarun: Loans from Rs. 5 lakhs to Rs. 10 lakhs
Choose a Financial Institution
Once you have identified the loan amount and category, you must choose a financial institution offering Mudra dairy farming loans. You can approach a bank, NBFC, or MFI participating in the PMMY scheme. You can also visit the official website of the PMMY scheme to find a list of participating institutions.
Submit the Loan Application
To apply for a Mudra loan, you must submit the loan application and the required documents. The documents required may vary depending on the financial institution but generally include the following:
- Business plan
- Identity proof
- Address proof
- Bank statement for the last 6 months
- Income tax returns (ITR) for the last 2 years
- Other relevant documents such as land documents, licenses, permits, etc.
In case you missed it: Government Dairy Farming Subsidy Schemes in India
Wait for Mudra Loan Processing and Approval
After submitting the loan application, the financial institution will verify your documents and assess your repayment capacity. They may also conduct a site visit to evaluate your business operations. The loan processing time may vary depending on the financial institution but generally takes 7-14 days.
If your loan application is approved, the financial institution will issue a sanction letter that includes the loan amount, interest rate, repayment period, and other terms and conditions. You need to carefully read and understand the sanction letter before signing it.
Disbursement of Loan Amount
Once you sign the sanction letter, the financial institution will disburse the loan amount to your bank account. Depending on your business requirements, the disbursement may be done in one or multiple tranches.
Utilization of Mudra Loan Amount
As mentioned in your business plan, you need to utilize the loan amount for the intended purpose. You must maintain proper records of your expenses and receipts to ensure transparency.
Repayment of Mudra Loan
You must pay back the loan amount and any interest by the due date. The time it takes to pay back a loan depends on the type of loan and where it was taken out, but it is usually between 3 and 5 years. According to the schedule, the loan must be paid back in equal monthly payments (EMIs). If you cannot repay the loan promptly, additional costs may be assessed and your credit rating may be negatively impacted.
In case you missed it: Feed Management in Dairy Farming: Feeding Plan, Feed Formula, and Feed Requirements
Conclusion
Getting a Mudra loan for dairy farming in India requires careful planning and preparation. You must have a clear business plan and meet the eligibility criteria to apply for the loan. With proper utilization and timely repayment, a Mudra loan can help you grow your dairy farming business and achieve your financial goals.
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