3 min
29 March 2025
Tarun Mudra Loan is a government initiative under the Pradhan Mantri Mudra Yojana (PMMY) scheme, aimed at providing financial support to small and micro enterprises. It is designed to help businesses grow by offering loans ranging from Rs. 5 lakhs to Rs. 10 lakhs. This Mudra Loan category is ideal for established enterprises that need capital for expansion, equipment purchase, or working capital. The loan facilitates easy access to credit for businesses without requiring collateral, thus encouraging entrepreneurial activities and job creation.
Features of the Tarun Loan
- Loan amount: Offers funding from Rs. 5 lakhs to Rs. 10 lakhs to support business growth.
- Purpose: Suitable for business expansion, purchasing equipment, and meeting working capital needs.
- Collateral-free: No collateral or security is required, making it accessible for small business owners.
- Interest rate: Competitive interest rates based on the applicant's profile and bank policies.
- Repayment tenure: Flexible repayment period ranging from 3 to 5 years, depending on the borrower’s financial condition.
- Processing Fee: Minimal processing charges, which may vary across different banks.
- Quick disbursal: Streamlined application process ensures quick disbursement of funds.
- Credit guarantee: Coverage under the Credit Guarantee Fund for Micro Units (CGFMU) to mitigate the risk for lenders.
- Support for diverse sectors: Available to various sectors including manufacturing, trading, and services.
- Promotes financial inclusion: Aims to include small businesses in the formal banking sector, promoting financial stability.
Benefits of the Tarun Loan
- Boosts business growth: Provides necessary funds for expansion, enabling businesses to scale operations and increase profitability.
- Improves infrastructure: Helps in acquiring new machinery and technology, improving production efficiency and product quality.
- Working capital support: Ensures sufficient working capital, maintaining smooth business operations and avoiding financial bottlenecks.
- Easy accessibility: No collateral requirement makes it easy for small businesses to access credit.
- Encourages entrepreneurship: Supports new and existing entrepreneurs, fostering innovation and job creation.
- Economic development: Contributes to the overall economic growth by supporting the SME sector, which is a major employment generator.
- Credit history improvement: Timely repayments enhance the credit score of the borrowers, facilitating future borrowings.
- Customised solutions: Banks provide tailored loan solutions based on the unique needs of the business.
- Government backing: Being a government-backed scheme, it offers a sense of security and trust among borrowers.
- Wide reach: Available across multiple banks and financial institutions, ensuring wide accessibility.
Eligibility for the Tarun Loan
- Business type: Small and micro enterprises in the manufacturing, trading, and service sectors.
- Loan amount requirement: Businesses needing funding between Rs. 5 lakhs and Rs. 10 lakhs.
- Creditworthiness: Applicants should have a good credit history.
- Business plan: A viable and sustainable business plan is necessary.
- Age criteria: Applicant must be between 18 to 65 years old.
- Business existence: The enterprise should be operational and profitable for a minimum period as specified by the lender.
- Non-defaulter: Applicant should not be a defaulter with any financial institution.
Documents required for a Tarun Mudra Loan
- Identity proof: Aadhaar Card, PAN Card, Voter ID, Passport.
- Address proof: Utility bills, Rent Agreement, Passport.
- Business proof: Registration Certificate, Trade License, Udyog Aadhaar.
- Financial documents: Bank statements, Income Tax Returns, Balance Sheets.
- Photographs: Recent passport-sized photographs of the applicant.
- Loan application: Duly filled and signed loan application form.
- Business plan: Detailed business plan including project report.
How to apply for a Tarun Mudra Loan?
- Visit the bank: Approach any bank or financial institution participating in the PMMY scheme.
- Application Form: Obtain and fill out the Mudra loan application form.
- Document submission: Submit the required documents including identity proof, address proof, business proof, and financial documents.
- Business plan: Provide a detailed business plan outlining the loan requirement and usage.
- Credit evaluation: The bank will assess the applicant’s creditworthiness and business viability.
- Approval and sanction: Upon successful evaluation, the bank will approve and sanction the loan amount.
- Disbursement: The approved loan amount is disbursed to the applicant’s bank account with the Mudra loan interest rate.
- Repayment terms: Discuss and agree on the repayment terms and tenure with the bank.
Tarun Mudra Loan - Annual reports
| Year | Total Disbursed Amount (Rs. Cr) | Number of Beneficiaries | NPA Percentage | Growth Rate (%) |
| 2019-2020 | 65,000 | 1,25,000 | 2.5% | 15% |
| 2020-2021 | 75,000 | 1,50,000 | 3.0% | 20% |
| 2021-2022 | 85,000 | 1,75,000 | 2.8% | 13% |
| 2022-2023 | 95,000 | 2,00,000 | 3.2% | 12% |
Most important terms and conditions
- Repayment Tenure: Typically ranges from 3 to 5 years.
- Interest Rate: Competitive rates as per bank policies.
- Collateral: No collateral required.
- Eligibility: Must meet the specific criteria set by the lender.
- Usage: Funds must be used for business purposes only.
- Documentation: Accurate and complete documents are mandatory.
Conclusion
Tarun Mudra Loan is a vital financial tool under the Pradhan Mantri Mudra Yojana, providing crucial support to small and micro enterprises in India. It fosters business growth, encourages entrepreneurship, and contributes to economic development by offering accessible, collateral-free business loans. With competitive interest rates and flexible repayment terms, it serves as an essential resource for business owners looking to expand and enhance their operations.
Know more about Bajaj Finserv Business Loans
Here are some of the key advantages of a business loan from Bajaj Finance that make it an ideal choice for your business expenses:
- Simplified application process: Online applications streamline the process, reducing paperwork and saving time.
- High loan amount: Businesses can borrow funds up to Rs. 80 lakh, depending on their needs and qualification.
- Quick disbursal: Funds can be received in as little as 48 hours of approval, allowing businesses to respond promptly to opportunities and needs.
- Competitive interest rates: The interest rates for our business loans range from 14% to 26% per annum.
