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Mudra Business Loan Under PM Mudra Yojana: Eligibility, Loan Amount and How to Apply

Planning to start a business, purchase equipment or expand a small enterprise? The Pradhan Mantri MUDRA Yojana (PMMY) helps eligible micro-enterprises access institutional credit through participating banks and other lending institutions. This guide explains the available loan categories, eligible business activities, documents to prepare, online application options and important points to check before borrowing.

Important: MudraBank.com is an independent informational website, not a bank or an official government portal. We do not sanction loans or guarantee approval. Applications are assessed by participating lenders, and eligibility, interest rates, fees, repayment terms and documentation depend on the lender’s applicable rules.

Information guide to business financing under PM Mudra Yojana

What Is a Business Loan Under PM Mudra Yojana?

Pradhan Mantri MUDRA Yojana (PMMY) was launched on 8 April 2015 to improve access to institutional credit for eligible micro-enterprises. Under the scheme, participating lending institutions provide finance for qualifying income-generating business activities in manufacturing, trading and services, including specified activities allied to agriculture.

Depending on the business proposal and lender’s assessment, financing may be considered for working capital, equipment, machinery and other eligible business requirements. The scheme is intended for business purposes; it should not be treated as a general-purpose personal loan.

For the official scheme description, visit the Department of Financial Services PMMY page.

Mudra Loan Amount and Categories in 2026

PMMY has four loan categories. The category describes the amount range; it does not guarantee that an applicant will receive the maximum amount.

Category	Loan amount	Typical business requirement
Shishu	Up to ₹50,000	Smaller initial business expenses or modest funding needs.
Kishor	Above ₹50,000 and up to ₹5 lakh	Business setup, operating expenses or early expansion.
Tarun	Above ₹5 lakh and up to ₹10 lakh	Eligible expansion, equipment or higher working-capital needs.
Tarun Plus	Above ₹10 lakh and up to ₹20 lakh	Eligible borrowers who have previously availed and successfully repaid a Tarun-category loan, subject to applicable rules.

Tarun Plus became applicable from 24 October 2024 for eligible entrepreneurs who have successfully repaid their previous Tarun-category loan. A new applicant should not assume that the Tarun Plus category is available without meeting this condition.

Read the latest Mudra loan schemes guide and confirm the current requirements with a participating lender before applying.

Mudra Business loan from mudra bank — Mudra Business loan from Mudra Bank

Which Businesses Can Consider a Mudra Loan?

PMMY may support eligible income-generating micro-enterprises in a range of business sectors. The exact activity and expenditure must meet the scheme requirements and the lender’s credit policy.

Retail and trading: eligible neighbourhood shops, small traders and other micro-businesses.
Manufacturing: eligible small production units and businesses that need equipment or working capital.
Service businesses: eligible repair, maintenance, personal-service and other service enterprises.
Food-related businesses: eligible food processing and other qualifying income-generating activities.
Commercial transport: eligible business-use vehicles and related activities, subject to the lender’s conditions.
Allied agricultural activities: specified income-generating activities such as dairy, poultry, beekeeping and other eligible activities.

This is a general guide, not an exhaustive list of approved activities. Ask the lender whether your particular business, asset purchase and intended use of funds are eligible.

Mudra Loan Eligibility Criteria

Eligibility is assessed under the applicable scheme conditions and the participating lender’s policies. Before applying, prepare to explain what your business does, why funding is needed and how the loan is expected to be repaid.

The lender may review factors such as:

The proposed or existing business activity and its eligibility.
The amount requested and the purpose for which it will be used.
The viability of the business plan and expected cash flow.
Identity, address and business-related documents.
Banking history, existing borrowing and repayment capacity.
Any additional conditions applicable to the selected lender or loan category.

There is no single credit score, age limit or document checklist that should be assumed to apply identically to every applicant and lender. Check the specific requirements before submitting your application. You can also review our Mudra loan eligibility guide.

Documents Required for a Mudra Business Loan

Documentation varies with the business, loan amount, applicant profile and lender. A general preparation checklist may include:

Completed application form provided by the lending institution.
Identity and address proof, as accepted by the lender.
PAN and other applicable tax or identification details.
Business address, registration, licence or establishment records, where applicable.
Bank statements and relevant financial records.
A business plan or project report describing the proposed activity, cost, expected income and repayment plan.
Supplier quotations for equipment, machinery or other proposed purchases, where required.
Additional records requested by the lender for the specific case.

Do not assume that every applicant must provide exactly the same documents. Ask the bank or lending institution for its current checklist before preparing or uploading sensitive documents.

How to Apply for a Mudra Loan Online

Applicants can explore the available digital application route through the official JanSamarth portal or approach a participating lending institution directly. The process and services available online may differ by lender and applicant.

Understand your funding need. Estimate the amount required and identify how it will be used for the business.
Prepare your business plan. Describe the business, customers, setup or operating costs, expected revenue and repayment capacity.
Check the official application route. Visit JanSamarth or contact a participating bank or lending institution.
Complete the application. Enter accurate information and upload documents only through a verified official service.
Respond to follow-up requests. The lender may request clarifications, additional documents or verification.
Review the offer carefully. Before accepting, check the sanctioned amount, interest rate, fees, repayment schedule and all conditions in writing.

Submitting an application or completing a digital eligibility check does not guarantee approval. The lender makes the credit decision after its applicable assessment.

Mudra Loan Interest Rate, Fees and Repayment

There is no single interest rate that should be assumed for every PMMY loan. The rate and repayment terms depend on the lending institution, loan product, applicant profile and applicable policy. Fees, repayment periods and any moratorium also need to be confirmed for the specific offer.

Before signing, ask the lender to explain:

The applicable interest rate and whether it is fixed or floating.
Any processing charges, insurance costs or other fees.
The repayment period, instalment amount and due dates.
Any moratorium or special repayment conditions, if offered.
Consequences of late payment and the process for early repayment.

For more information, see our Mudra loan interest rate guide. Confirm all figures with the lender because products and policies may change.

Are Mudra Loans Collateral-Free?

PMMY is described by the Government as a collateral-free credit scheme. However, applicants should read the lender’s sanction letter and loan documents carefully. The lender can still require documentation, may take security over assets financed where applicable, and must follow the terms governing the particular facility. Ask the lender to explain any security-related clause before signing.

Can a New Business or Startup Apply?

A proposed or newly established micro-enterprise may be considered if it meets the applicable scheme conditions and the lender accepts the business proposal. A new business should prepare a realistic plan covering setup costs, equipment, working capital, likely customers, projected sales and expected cash flow.

Existing businesses seeking expansion should explain how the additional funding will be used and how the business expects to service the repayment. Approval depends on the lender’s assessment, not simply on whether the applicant is a new or existing entrepreneur.

What If Your Mudra Loan Application Is Delayed or Rejected?

If your application is pending, contact the bank or institution processing it and ask whether any documents, clarifications or formalities remain outstanding. Keep your acknowledgement or reference number and retain relevant correspondence.

If the application is declined, ask the lender whether it can provide the reason and whether a revised proposal or additional documentation may be considered. Do not pay an agent who promises guaranteed approval or claims to influence a bank’s decision.

You can also read our guide to checking Mudra loan status online for general application-tracking steps.

Frequently Asked Questions About Mudra Business Loans

What is the maximum loan amount under PMMY?

PMMY has four categories: Shishu up to ₹50,000; Kishor above ₹50,000 up to ₹5 lakh; Tarun above ₹5 lakh up to ₹10 lakh; and Tarun Plus above ₹10 lakh up to ₹20 lakh. Tarun Plus is subject to the condition that the entrepreneur has previously availed and successfully repaid a Tarun-category loan. The amount approved depends on the lender’s assessment.

Can I apply for a Mudra loan for a new business?

A new business may be considered if its activity and funding needs meet the scheme requirements and the lender’s criteria. Prepare a practical business plan, cost estimates and repayment projections before applying.

Can I use a Mudra loan for working capital or equipment?

PMMY can cover eligible term-loan and working-capital requirements. The lender must confirm whether the specific expenditure, equipment or working-capital proposal is eligible for the business and product.

Is the interest rate the same at every bank?

No single interest rate applies to every Mudra loan. Rates, fees and repayment terms vary by lender and loan product. Ask the lender for a written offer and review all charges before accepting.

Does a Mudra loan guarantee approval without collateral?

No. PMMY is a collateral-free credit scheme, but the applicant must still meet the applicable requirements and pass the lender’s assessment. A scheme category or an online application does not guarantee sanction.

Where can I apply for a Mudra loan?

You can explore the official JanSamarth portal or contact a participating bank or eligible lending institution. Confirm the application route and document requirements with the institution handling your application.

Official PMMY Information and Related Guides

For accurate scheme information, begin with official sources and then confirm application-specific details with your lender.

Disclaimer

MudraBank.com is an independent informational website and is not owned, operated or authorised by the Government of India, MUDRA Ltd. or any bank. We do not provide or sanction loans and do not guarantee eligibility, approval, interest rates, subsidies or disbursement dates. Scheme information is provided for general educational purposes. Always verify current rules with official sources and obtain the lending institution’s written terms before making a financial decision.

Last reviewed: October 2026. Scheme rules and lender processes may change; check official sources before applying.

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