Apply Online Pradhan Mantri Mudra Yojana Scheme (PMMY)

Mudra Loan Categories: Shishu, Kishore, Tarun and Tarun Plus

PMMY loans are categorised by the stage and funding needs of the business. The four categories cover the journey from a first-time micro-entrepreneur to a growing small business.

1. Shishu Mudra Loan (up to Rs. 50,000)

Shishu loans target first-time entrepreneurs and very small businesses — street vendors, small shopkeepers, home-based makers, service providers just starting out. The funding typically goes toward initial stock, basic tools, or setting up a small shop or kiosk. Documentation is minimal.

2. Kishore Mudra Loan (Rs. 50,001 to Rs. 5 lakh)

Kishore loans cover small businesses that are operational and have a clear plan to grow. Common uses include buying additional machinery, hiring staff, expanding inventory, or upgrading equipment. The lender typically asks for a brief business plan and bank statements.

3. Tarun Mudra Loan (Rs. 5,00,001 to Rs. 10 lakh)

Tarun loans are for established small businesses ready to take on a meaningful expansion — opening a second outlet, buying production-grade machinery, entering new geographies, or scaling output. Documentation requirements are more detailed (last two years' financials, asset-liability statement, business plan).

4. Tarun Plus Mudra Loan (Rs. 10,00,001 to Rs. 20 lakh)

Tarun Plus is the newest category, introduced on 24 October 2024. Unlike the other three, it is not open to everyone — only to entrepreneurs who have already taken and successfully repaid a Tarun-category loan. This effectively creates a graduated pathway: a borrower who completes a ₹10 lakh Tarun loan with a clean repayment record becomes eligible for up to ₹20 lakh of additional credit at the same collateral-free terms.

While this scheme does offer financing, an business loan from Bajaj Finance may give you access to a higher sanction. On meeting the simple criteria and furnishing minimal documentation, you can get approved for up to Rs. 80 lakh* in under 48 hours.

*inclusive of insurance premium, VAS charges, documentation charges, Flexi fees, and processing fees.

Purposes of MUDRA loans

Mudra loans can fund any legitimate non-farm, non-corporate income-generating activity in manufacturing, trading or services. Specific eligible purposes include:

• Working capital — buying raw materials, stocking inventory, managing day-to-day expenses
• Equipment and machinery — purchasing or upgrading production equipment
• Commercial vehicles — auto-rickshaws, three-wheelers, e-rickshaws, taxis, small goods carriers, tractors and power tillers used commercially, two-wheelers used c
• ommercially
• Setting up or expanding a shop, workshop, kiosk, parlour, restaurant or service outlet
• Allied agricultural activities — pisciculture, poultry, dairy, beekeeping, agro-processing, agri-clinics (but not crop loans or irrigation)
• Food processing — papad, biscuits, jams, ice cream, agricultural preservation, cold storage, catering
• Textile activities — handloom, khadi, embroidery, traditional dyeing, powerloom, knitting, stitching

Eligible Sectors and Activities Under PMMY Mudra Loans

Mudra loans fund income-generating activities by non-corporate, non-farm micro and small enterprises, including:

• Small manufacturing units and processing
• Shopkeepers, traders and retailers
• Service businesses — repair shops, salons, tailoring, tuition, small eateries
• Transport vehicles used for commercial purposes (e.g. a commercial CNG tempo or taxi)
• Allied agriculture activities — dairy, poultry, beekeeping, pisciculture and similar (not crop loans)

Who is not eligible

• Crop / direct agriculture loans (these are covered by other schemes)
• Large corporates and businesses needing more than Rs. 20 lakh
• Applicants who are existing defaulters with a bank or financial institution

Which Mudra category fits your business?

State-level top-up benefits on PMMY Mudra Loans

PM Mudra Loan Eligibility Criteria

To qualify for a MUDRA loan, you must meet these eligibility criteria:

• Mudra loan age limit: 18 to 65 years
• You need to be an eligible borrower:
  • Individuals
  • Sole proprietorship
  • Private limited company
  • Public limited company
  • Partnership firm
  • Any other legal entity

• The candidate must have a business plan or already run a small enterprise.
• The business should be a non-farm activity in trading, manufacturing, or services.
• Your credit requirement must be under Rs. 20 lakh.

Shop owners, vendors, small producers, craftsmen, food processing unit owners, repair shop owners, transport business owners, and service business owners may apply. Farming-related businesses are not eligible, but agriculture support activities (like equipment, services, or food processing) can apply online for a MUDRA loan.

Required documents for Mudra Loan

When applying for a Mudra Loan, applicants need to provide specific documents to support their loan application. Here are the documents required for mudra loan:

For Shishu category

• Identity proof — Aadhaar, PAN, Passport, Voter ID or Driving Licence
• Address proof — recent utility bill, rental agreement, Aadhaar or Passport
• Two recent passport-size photographs
• Quotation for machinery, equipment or other items to be purchased
• Bank statement (last 6 months)
• Caste certificate (SC/ST/OBC/Minority), where applicable
• Address of the business, if available

For Kishore, Tarun and Tarun Plus categories

In addition to the Shishu documents:

• Business address proof — rental agreement or ownership document
• Udyam (MSME) registration
• Last two years' unaudited balance sheets (for existing businesses)
• Sales figures for the current financial year
• Proforma invoices or quotations for items to be purchased
• Asset and liability statement of the borrower
• Income tax returns, where applicable

Mudra Loan Interest Rates

There is no single Government-fixed Mudra loan interest rate. Each lender sets its own rate, usually linked to its benchmark (MCLR or a repo-linked rate) plus a spread that depends on the loan category and your profile. Indicatively, Mudra loan rates fall in the region of about 8% to 12% per annum, but the actual rate is decided by the lender.

Other things to know about the cost:

• Collateral-free — no security is required; the loan is backed by a credit guarantee, so you are not asked to pledge assets.
• Processing fees are often nil or minimal for Shishu loans; higher categories may carry a processing fee as per the lender.
• Repayment tenure is typically up to 5–7 years depending on the lender and the purpose, often with a moratorium option.

Steps to apply for Mudra Loan online

To apply for a Mudra Loan online, follow these steps:

• Visit the official website of the Mudra Loan portal or the website of a participating bank.
• Register as a new user and create an account on the portal.
• Complete the loan application form with accurate details about your business, loan amount required, and repayment capacity.
• Upload the required documents, including identity proof, address proof, business plan, and financial statements.
• Review the application carefully and submit it online.
• Track the status of your application through the online portal or contact the bank for updates.
• Once approved, complete any additional documentation and formalities required by the bank to disburse the loan amount.

Steps to apply for Mudra Loan offline

To apply for a Mudra Loan offline, follow these steps:

• Visit a participating bank branch or financial institution offering Mudra Loans.
• Request a loan application form from the bank's loan officer.
• Fill out the application form with accurate details about your business, loan amount required, and repayment capacity.
• Attach the required documents, including identity proof, address proof, business plan, and financial statements.
• Submit the completed application form along with the documents to the bank officer.
• The bank will review your application and verify the documents.
• Once approved, complete any additional formalities required by the bank to disburse the loan amount.

Benefits of a Mudra Loan

• Collateral-free — no asset or security needs to be pledged, even at the Rs. 20 lakh limit (covered under CGFMU)
• Credit Guarantee Fund support — protects lenders, which makes them more willing to lend to first-generation borrowers
• Wide eligibility — almost any non-farm, non-corporate small business qualifies
• Multiple credit forms — term loan, working capital, overdraft, equipment financing, composite loans
• Flexible tenures — up to 7 years, with moratorium options
• Concessional support — women entrepreneurs and SC/ST/OBC/Minority applicants often access preferential terms
• Wide network — available from over 100 Scheduled Commercial Banks, RRBs, SFBs, NBFCs and MFIs
• Mudra Card facility — lets borrowers draw and repay flexibly

Limitations of the Mudra Loan Scheme

Mudra is an excellent fit for certain businesses, but the scheme has limits that every borrower should know:

• Loan ceiling — even with Tarun Plus, the maximum is Rs. 20 lakh. Many growing businesses need more
• Tarun Plus access is restricted — you cannot apply directly; you must have completed and repaid a Tarun loan first
• Non-corporate, non-farm only — companies and farming businesses cannot apply
• Interest rates vary widely between lenders, and NBFC rates can be considerably higher than PSB rates
• Application turnaround can be slow at PSBs — sometimes several weeks
• Lending decisions still depend on the borrower's credit profile; Mudra is collateral-free but not unconditional

Common mistakes when applying for a Mudra loan

• Assuming MUDRA lends directly: MUDRA refinances lenders; it does not give loans itself. Apply to a bank/lender or via the official portals — not to MUDRA.
• Paying an agent for “guaranteed” approval: There are no authorised middlemen who can guarantee a sanction. Approval depends on the lender’s assessment. Use official channels only.
• Applying in the wrong category: Asking for an amount that doesn’t match your stage (or applying for Tarun Plus without a repaid Tarun loan) leads to rejection. Match the category to your need and history.
• Incomplete or weak documentation: Missing business proof or bank statements is the most common reason small applications stall. Prepare the lender’s full checklist before applying.