Access collateral-free business loans through Pradhan Mantri Mudra Yojana. Three categories - Shishu (₹50K), Kishore (₹5L), Tarun (₹10L) for micro enterprises. Quick approval, low interest rates, available at banks, NBFCs, and MFIs nationwide.
PMMY (Pradhan Mantri Mudra Yojana) was launched on April 8, 2015, by the Prime Minister to provide institutional credit to micro and small businesses. MUDRA stands for Micro Units Development and Refinance Agency Ltd., established as a subsidiary of SIDBI.
The scheme addresses the critical funding gap faced by micro entrepreneurs who often rely on expensive informal credit sources. Mudra provides refinancing to banks, NBFCs, and MFIs, enabling them to offer collateral-free loans up to ₹10 Lakhs to the smallest businesses - from street vendors to small manufacturers.
Since launch, over 40 crore loans worth more than ₹20 lakh crores have been sanctioned, making PMMY the world's largest micro-credit program. The scheme covers all non-farm income-generating activities including manufacturing, trading, and services across sectors like retail, transport, food service, textiles, and more.
What makes Mudra unique: No collateral required, No MUDRA processing fee, Available at virtually every bank branch, Simple application process, Quick approval (2-4 weeks), and Special benefits for women, SC/ST, and OBC entrepreneurs.
Three Categories of Mudra Loans
Shishu
Up to ₹50,000
Startup / Infant Stage
For businesses in initial stage needing small capital to start
Simplest documentation
Fastest approval process
Ideal for first-time entrepreneurs
Street vendors, small shops
Kishore
₹50K to ₹5 Lakhs
Growth Stage
For established businesses needing funds for expansion or equipment
Moderate documentation
For growing businesses
Equipment purchase
Working capital needs
Tarun
₹5L to ₹10 Lakhs
Expansion Stage
For well-established businesses planning significant expansion
Detailed business plan needed
Major expansion projects
Large equipment purchase
Significant working capital
Progression Path: Start with Shishu, graduate to Kishore as business grows, move to Tarun for major expansion. Many successful businesses have progressed through all three categories over time.
Businesses Covered Under Mudra Loan
Retail Stores
Manufacturing
Food Service
Transport
Textiles & Garments
Beauty Salons
IT Services
Printing
Repair Services
Agriculture Allied
Street Vendors
Small Workshops
Mudra Loan Eligibility Criteria
Business Type
Micro enterprise in manufacturing, trading, or services sector
Loan Amount
Credit requirement up to ₹10 Lakhs (choose appropriate category)
Borrower Type
Individual, proprietor, partnership, company, or any legal entity
Age Limit
Typically 18 to 65 years (varies by lender)
Credit History
No loan defaults, good credit score preferred (not mandatory for Shishu)
Business Stage
New startups and existing businesses both eligible
Income Activity
Non-farm income-generating activity or business
Documentation
Basic KYC and business proof (simpler for Shishu category)
How to Apply for Mudra Loan
1
Choose Your Category
Decide between Shishu (₹50K), Kishore (₹5L), or Tarun (₹10L) based on your funding need
2
Prepare Business Plan
Simple plan explaining your business, how loan will be used, and repayment capacity
3
Find Mudra Lender
Visit nearest bank, NBFC, or MFI offering Mudra loans. Use MUDRA website to locate branches
4
Collect Application Form
Get Mudra loan application form from branch or download from bank's website
5
Fill & Submit Application
Complete form with business and personal details. Attach required documents and submit
6
Verification Process
Bank may visit your business location, verify documents, and assess creditworthiness
7
Loan Approval
Approval typically takes 2-4 weeks. Bank will communicate decision and loan terms
8
Loan Disbursement
Sign loan agreement. Amount disbursed to your bank account. Mudra Card issued if applicable
Interest Rates & Charges
Interest Rates
8% - 12%
Per annum, varies by lender, category, and borrower profile
Shishu: Usually 10-12%
Kishore: Usually 12-14%
Tarun: Usually 14-16%
Women/SC/ST: 0.5-1% concession
Fees & Charges
Minimal
MUDRA doesn't charge fees, but lenders may have nominal charges
No MUDRA processing fee
Lender may charge 0.5-2%
No prepayment penalty
GST applicable on fees
Compare Before Applying: Interest rates vary significantly across lenders. Public sector banks often offer lower rates. Compare at least 3-4 banks/NBFCs before deciding.
Special Benefits for Priority Categories
Women Entrepreneurs
0.25-0.5% interest rate concession
Priority processing of applications
Dedicated women entrepreneur desks
Additional government scheme benefits
SC/ST/OBC Borrowers
0.5-1% interest rate concession
Relaxed documentation norms
Priority sector lending benefits
Additional subsidy schemes available
First-Time Entrepreneurs
Simplified application process
Business mentorship support
Free entrepreneurship training
Flexible repayment options
Rural Borrowers
Easier accessibility through RRBs
Lower documentation requirements
Integrated with rural development
Connection to other rural schemes
Key Benefits of Mudra Loan
No Collateral Required
Get loans up to ₹10L without pledging property
Quick Approval
Loan approval in 2-4 weeks with complete docs
Available Everywhere
Access through banks, NBFCs, MFIs nationwide
Simple Process
Easy documentation, straightforward application
Suitable for Startups
New businesses without track record eligible
Flexible Repayment
3-7 years tenure, monthly EMI options
Government Backed
Central government flagship scheme
Mudra Card Facility
Working capital loans via Mudra Card
No Processing Fee
MUDRA doesn't charge any processing fee
Competitive Rates
Lower interest rates compared to informal credit
What Can Mudra Loan Be Used For?
Business Equipment
Machinery, tools, computers, furniture
Working Capital
Inventory, raw materials, stock
Shop Setup
Retail store, office, workshop establishment
Vehicle Purchase
Commercial vehicles, delivery vans
Business Expansion
New product line, additional location
Technology Upgrade
Software, equipment modernization
Note: Loan should be used only for business purposes as stated in application. Personal expenses, land purchase, or speculative activities are not covered.
Our Mudra Loan Support Services
Category Selection (Shishu/Kishore/Tarun)
Business Plan Preparation
Financial Projections & Budgeting
Complete Documentation Support
Bank/Lender Comparison & Selection
Application Form Filling
Credit Score Check & Improvement Tips
Bank Liaison & Follow-up
Interview Preparation
Loan Agreement Review
Disbursement Process Support
EMI Planning & Calculation
Common Mistakes to Avoid
✗
Choosing wrong category - apply for amount you actually need
✗
Poor or incomplete business plan without proper details
✗
Applying at only one bank - compare multiple lenders
✗
Not checking credit score before applying
✗
Incomplete documentation leading to rejection
✗
Overstating income or providing false information
✗
Not understanding repayment terms and EMI burden
✗
Applying for maximum amount without considering repayment
✗
Not utilizing loan for stated business purpose
✗
Missing follow-ups with bank after application
Mudra Categories Comparison
Feature
Shishu
Kishore
Tarun
Loan Amount
Up to ₹50,000
₹50K to ₹5L
₹5L to ₹10L
Best For
Startups
Growing Business
Expansion
Documentation
Minimal
Moderate
Detailed
Business Plan
Simple
Moderate Detail
Comprehensive
Typical Rate
10-12%
12-14%
14-16%
Approval Time
1-2 weeks
2-3 weeks
3-4 weeks
Important Points to Remember
Mudra loans are completely collateral-free up to ₹10 Lakhs
Available through banks, NBFCs, and MFIs - compare interest rates
Choose category wisely based on actual funding need and stage
MUDRA itself doesn't charge any processing fee
Both new startups and existing businesses are eligible
Women, SC/ST, OBC borrowers get special benefits and lower rates
Credit score matters - maintain good credit history
Use loan only for business purpose as stated in application
Mudra Card available for working capital loans
Repayment tenure typically 3-7 years with monthly EMIs
Mudra loan (PMMY - Pradhan Mantri Mudra Yojana) is a flagship government scheme launched in 2015 to provide collateral-free credit to micro enterprises. MUDRA stands for Micro Units Development and Refinance Agency Ltd. The scheme offers loans up to ₹10 Lakhs in three categories based on business stage: Shishu (up to ₹50,000), Kishore (₹50K to ₹5 Lakhs), Tarun (₹5L to ₹10 Lakhs). Available through commercial banks, RRBs, cooperative banks, MFIs, and NBFCs. No collateral, no processing fee by MUDRA, covers all non-farm income-generating activities. Over 40 crore loans disbursed since launch, making it world's largest micro-credit scheme.
Who is eligible for Mudra loan?
Eligibility is broad and inclusive: Individual proprietors, partnerships, LLPs, private companies, Micro enterprises in manufacturing, trading, or services, Small businesses, artisans, food processors, Self-employed professionals, Shopkeepers and vendors, Transport operators, Small industries, Service sector businesses. Loan amount should not exceed ₹10 Lakhs, No existing loan defaults, Should have viable business activity or plan. Both new startups and existing businesses eligible. Age typically 18-65 years. Available to all castes, religions (though SC/ST/OBC/Women get preference and better rates). The scheme is designed to be inclusive - even street vendors, beauticians, tailors, and small manufacturers can access Mudra loans.
What are the three types of Mudra loans?
Three categories based on funding needs: (1) SHISHU: Up to ₹50,000 - For businesses in infancy stage, startups, very small ventures needing initial capital. Simplest documentation, fastest approval. (2) KISHORE: ₹50,001 to ₹5,00,000 - For established small businesses needing growth capital, equipment upgrade, or expansion. Moderate documentation. (3) TARUN: ₹5,00,001 to ₹10,00,000 - For well-established businesses planning major expansion, larger equipment purchase, or significant working capital needs. Detailed business plan required. All three are collateral-free. You can graduate from Shishu to Kishore to Tarun as your business grows. Interest rates increase slightly with higher categories.
What is the interest rate for Mudra loan?
Interest rates are not fixed by MUDRA but determined by lenders. Typical range: 8% to 12% per annum. Factors affecting rate: Loan category (Shishu typically 10-12%, Kishore 10-14%, Tarun 12-16%), Lending institution (banks vs NBFCs vs MFIs), Borrower's credit score (higher score = lower rate), Business vintage and track record, Borrower category (Women, SC/ST, OBC often get 0.5-1% concession). NO processing fee charged by MUDRA itself. Individual lenders may charge nominal processing fees (0.5-2%). Compare rates across multiple banks and NBFCs. Public sector banks often offer lower rates. Repayment tenure: 3 to 7 years typically.
How to apply for Mudra loan?
Step-by-step application: (1) Identify your category (Shishu/Kishore/Tarun based on requirement), (2) Prepare simple business plan explaining how funds will be used, (3) Find nearest Mudra lending bank/NBFC/MFI (use MUDRA website branch locator), (4) Download application form or collect from branch, (5) Fill form with business details, loan requirement, personal information, (6) Attach required documents - KYC, business proof, bank statements, quotations, (7) Submit application at branch, (8) Bank officer may visit business location for verification, (9) Credit evaluation and approval (2-4 weeks), (10) Loan agreement signing, (11) Disbursement to your bank account. Online application also available at many banks through their websites/apps. Mudra Card may be issued for working capital loans.
Can I get Mudra loan for a new business?
Yes, absolutely! Mudra loans are available for both new startups and existing businesses. For new/startup businesses: Focus on Shishu category (up to ₹50K) initially, Prepare simple but clear business plan, Show how the loan will be utilized, Demonstrate market potential and your capability, Personal credit score of promoter/owner matters, Prior experience in the field helps but not mandatory. Even without business registration, you can apply as an individual/proprietor. Business registration (Shop Act, GST, etc.) strengthens application but isn't always required for smaller Shishu loans. First-time entrepreneurs, women entrepreneurs, and young entrepreneurs are especially encouraged. The scheme's very purpose is to enable entrepreneurship by providing initial capital without collateral burden.