How Udyam Registration Helps in Getting Mudra Loans

Ever since the introduction of Udyam registration, the government has always tried to ensure that MSMEs get maximum benefits and

Jul 2, 2025 - 13:05
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How Udyam Registration Helps in Getting Mudra Loans

Whenever we want to start any new business or want to grow it further, the most important component that is needed is financial support. Financial support is available for small business owners in India through the Mudra Loan Scheme. The Mudra Loan Scheme works as a lifeline for them. But to take full advantage of this scheme, small businesses will first have to complete the process of Udyam Registration.

In this article, information related to Mudra loan has been given, how Udyam registration helps entrepreneurs to get Mudra loan easily, and why it should be your first step before applying for any business funding.

First of all, let's know about Udyam Registration.

Udyam Registration was introduced by the Government of India for Micro, Small, and Medium Enterprises. It gives official recognition to the business of MSME. And it makes MSMEs eligible to get all the schemes of the Ministry of MSME, including government schemes, subsidies, and bank loans.

Whether you are a startup, a small shop owner, or a growing local manufacturer, first register your business on the Udyam Registration Portal. This will provide legitimacy to your business and also financial opportunities.

What is the Mudra Loan Scheme?

Mudra loan is a part of Pradhan Mantri Mudra Yojana, which was launched by the Government of India to help small businesses and provide them with collateral-free loans. This loan is available through banks, NBFCs, and microfinance institutions to help MSMEs.

With this loan, MSMEs

  • Can start a new business

  • Can expand their old business even further

  • Can buy machinery and equipment

  • Can manage work capital

There are three categories in the Mudra loan.

The government has already made it easy to apply for this loan, but if you have a Udyam Registration Certificate, then the chances of approval and benefit can increase even faster.

How Udyam Registration helps in getting a Mudra loan

Here are some key ways in which Udyam Registration supports your Mudra loan application

Your business proves that it is a legitimate MSME

Banks and NBFCs always prefer to give loans to those businesses that are registered and verified. With a Udyam Registration Certificate, your business is officially included in the MSME database. This will build trust and reduce lender risk.

Easy documentation

A big challenge is managing the paperwork whenever you apply for a Mudra loan. But with Udyam registration, your business already gets a digital identity. A lot of your business details, like type of business, size, Aadhaar verification, etc., are already recorded and this is known to lenders, reducing the burden of documentation.

Improving loan eligibility

Banks already have guidelines regarding the application process of the Mudra loan. Having a Udyam Registration Certificate confirms your MSME status and helps you clear the eligibility criteria quickly. This shows that your business is genuine, active, and is within the turnover limit of MSME.

Enables faster loan processing

The Udyam registration is integrated with many government portals, such as GST, Income Tax, so all your data can be verified quickly by the financial institution. Due to this, your loan gets approved quickly and reduces delays.

Access to special loan offers for MSMEs

There are many banks and NBFCs that offer exclusive loan products and interest rate benefits only to Udyam-registered MSMEs. After getting Udyam registration done, you become eligible to pay interest rates, you also get relaxation in loan repayment, and you get a good loan amount under the Mudra scheme.

Documents required for Mudra loan, along with Udyam registration

Whenever you apply for a Mudra loan as a Udyam-registered business, there are some important documents that you often need, such as

  • Udyam Registration Certificate

  • Aadhaar Card (of the business owner)

  • PAN Card

  • Business proof (registration certificate, shop act license, etc.)

  • Address proof

  • Quotation for machinery or other expenses (if applicable)

  • Bank statement (past 6 months)

  • Business plan or purpose of the loan

Note: Requirements may slightly vary depending on the lender.

Benefits You Get After Loan Approval

Once your Mudra loan is sanctioned, here’s what you gain as a Udyam-registered MSME:

  • No collateral required

  • Easy EMI options

  • Access to working capital

  • Boost in credit profile.

  • Eligible for government subsidies and schemes linked to MSME loans

You Can Apply for Cancel Udyam Registration Online Through Udyam Portal

Conclusion 

Ever since the introduction of Udyam registration, the government has always tried to ensure that MSMEs get maximum benefits and they never have to face financial difficulties. Both Udyam registration and Mudra loans together can help MSMEs grow even faster, and in this competitive environment, they can achieve sustainability.