PM Mudra Loan Scheme 2026: Eligibility, Apply Online & Interest Rates

Pradhan Mantri Mudra Yojana (PMMY) is a flagship Government of India initiative that offers collateral-free Mudra loans up to ₹10 lakh to micro and small businesses across India. Introduced in 2015, the PM Mudra Loan Scheme aims to promote self-employment by providing easy access to formal credit for shop owners, traders, manufacturers, street vendors, and service providers.

Till date, PMMY has enabled loans to 47+ crore beneficiaries, making it one of the largest financial inclusion programs in the country. These loans are disbursed through banks, NBFCs, and micro-finance institutions, including SBI e-Mudra, helping entrepreneurs start new ventures, expand businesses, and reduce dependence on high-interest informal lenders.

Important Things to Know Before Applying

While the scheme is government-backed, loan approval depends on lender assessment, eligibility, and documentation. Applicants should review lender terms, interest rates, and repayment obligations carefully before applying.

What is PM Mudra Loan Scheme?

The Pradhan Mantri Mudra Yojana (PMMY) is a government-backed business loan scheme that helps small businesses get collateral-free funding. Whether you run a shop, want to start a food business, buy equipment, or expand an existing venture, Mudra loans can support your business needs.

• Loan limit updated to ₹20 lakh
• Who it is meant for
• Quick note that banks decide approval

Mudra Loan Categories under Pradhan Mantri Mudra Yojana (PMMY)

The Pradhan Mantri Mudra Yojana (PMMY) offers four loan categories, designed to match different stages of business growth and funding requirements. These categories are defined and periodically updated by the Government of India and MUDRA Ltd., as reflected in official scheme guidelines and Union Budget announcements.

• Shishu: Designed for new or early-stage businesses, this category provides loans of up to ₹50,000. It mainly supports first-time entrepreneurs and small vendors starting income-generating activities. [2]
• Kishore: Covers loans above ₹50,000 and up to ₹5 lakh, aimed at businesses that have moved beyond the startup phase and need funds for expansion or stabilisation. [3]
• Tarun: Offers loans above ₹5 lakh and up to ₹10 lakh for well-established micro-enterprises looking to scale operations, invest in equipment, or increase working capital. [4]
• Tarun Plus: Introduced under the Union Budget 2024–25, this category provides enhanced funding above ₹10 lakh and up to ₹20 lakh. It is available only to entrepreneurs who have successfully repaid an earlier Tarun loan, encouraging credit discipline and business growth. [5]

Who Should Apply for a Mudra Loan?

A Mudra loan can be useful for small business owners, self-employed professionals, vendors, repair shops, food businesses, transport operators, and first-time entrepreneurs looking for funding. If you need money for business growth rather than personal expenses, the scheme may be suitable.

PM Mudra Loan Eligibility Criteria

To be eligible for the Pradhan Mantri Mudra Yojana (PMMY) loan, applicants must be Indian citizens who are running or planning to start a non-farm, income-generating micro or small enterprise, with total credit needs of up to ₹20 lakh.

Key Eligibility Criteria for PM Mudra Loan

• Applicant Status: The applicant must be an Indian citizen.
• Age Limit: The general age requirement is between 18 years and 65 years.
• Borrower Type: The scheme is open to multiple business structures, including:
  • Individuals
  • Sole proprietorships
  • Partnership firms
  • Private limited and public limited companies
  • Other recognised legal entities
• Business Sector: The enterprise must operate in manufacturing, trading, or services. Allied agricultural activities such as poultry, dairy, and beekeeping are also eligible.
• Loan Purpose: The loan must be used strictly for business or income-generating purposes, not for personal expenses.
• Credit History: The applicant should have a satisfactory credit record and must not be a loan defaulter with any bank or financial institution.
• Business Plan: For higher loan categories (Kishore, Tarun, and Tarun Plus), lenders may ask for a viable business plan or project report, along with basic financial details such as sales records or balance sheets.

Exclusions

• Direct agricultural activities, such as crop cultivation, are generally not covered by this scheme.
• The applicant must not have any existing loan defaults. 

Required Documents for PM Mudra Loan Scheme

Documents may vary slightly by lender and loan category, but generally include:

• Duly filled PMMY loan application form
• Identity proof: Aadhaar Card, PAN Card, Voter ID, Passport, or Driving Licence
• Address proof: Aadhaar/Passport, recent electricity or telephone bill, or bank statement
• Photographs: 2 recent passport-size photos
• Business proof: Registration, licence, or ownership documents (if available)
• Bank statements: Last 6–12 months
• Income proof: ITR and financial statements (usually for loans above ₹2 lakh)
• Machinery or asset quotation, if applicable
• Category proof: SC/ST/OBC/Minority certificate, if applicable

How to Apply for PM Mudra Loan Online & Offline (Pradhan Mantri Mudra Yojana)

To apply for a Pradhan Mantri MUDRA Yojana (PMMY) loan, applicants can choose either the online or offline route. The scheme offers collateral-free loans to non-corporate, non-farm micro and small enterprises engaged in manufacturing, trading, or services.

Mudra Loan Online Apply Process (e-Mudra / Bank Website)

You can apply online through official government portals:

Steps to apply online:

• Visit the UdyamiMitra or JanSamarth portal
• Register or log in and select the appropriate loan category (Shishu, Kishore, Tarun, or Tarun Plus)
• Fill in personal, business, and professional details
• Upload the required documents
• Submit the application and save the application reference number
• The portal matches you with eligible lenders, after which you can choose an offer and proceed with digital approval

Offline Mudra Loan Application Process (Bank Branch)

Applicants can also apply directly through a lending institution.

• Visit a participating Public Sector Bank, Private Bank, RRB, NBFC, MFI, or Cooperative Bank
• Collect the PMMY application form from the branch or download it from the bank’s official website
• Fill in the form accurately and attach all required documents
• Submit the completed application at the branch
• The lender verifies the details and disburses the loan after approval

You can find participating lenders on the official MUDRA website:

Target Beneficiaries of PM Mudra Yojana

The scheme is designed to support a wide range of small business owners, including:

• Small shopkeepers and street vendors
• Micro manufacturing units
• Food service outlets and food processing businesses
• Repair shops, artisans, and craftsmen
• Commercial vehicle operators such as truck and taxi owners
• Women entrepreneurs, who account for a significant share of beneficiaries
• Entrepreneurs from SC, ST, and OBC communities

Who Cannot Apply for PM Mudra Loan?

• Individuals seeking loans for personal or non-business expenses
• Businesses engaged only in traditional farming activities such as crop cultivation
• Applicants who have defaulted on previous loans with banks or financial institutions

Why Mudra Loan Applications Get Rejected?

Many applicants assume government-backed loans are automatically approved, but banks still evaluate risk before sanctioning the loan. Applications may be rejected due to poor credit history, weak business plans, incomplete documents, low repayment capacity, or applying under the wrong loan category.

• Low CIBIL score
• Incomplete KYC
• No business proof
• Unclear loan purpose
• Existing defaults

Common Mistakes to Avoid Before Applying

Many borrowers delay approval because of small mistakes such as choosing the wrong Mudra category, submitting outdated bank statements, overstating revenue, or applying without a clear business plan. Avoiding these errors can improve approval chances.

Mudra Loan vs Regular Business Loan

Feature	Mudra Loan	Regular Business Loan
Collateral	Usually No	May be Required
Loan Size	Up to ₹20 lakh	Higher possible
Interest	Lender-based	Lender-based
Best For	Small businesses	Established businesses

How Long Does Mudra Loan Approval Take?

Mudra loan approval timelines vary by lender, documents, and loan size. Smaller Shishu loans may be processed faster, while Kishore and Tarun loans may take longer because banks may assess business viability before approval.

PM Mudra Loan Interest Rate & Repayment Terms

The Pradhan Mantri Mudra Yojana (PMMY) provides collateral-free loans to non-corporate, non-farm small and micro-enterprises. The scheme follows flexible interest rates and repayment terms set by individual lenders.

1. Interest Rates (2025)

• Rate Structure: Interest rates are not fixed by the government. They are decided by banks, NBFCs, and MFIs as per RBI guidelines and the borrower’s credit profile.
• Typical Range: Rates usually start from 8.85%–9.30% per annum and may go up to 12% or higher, depending on the lender and risk level.
• Bank-Specific Examples (2026):
  • SBI: Around 12.15% p.a. (approximately 3.25% above EBLR).
  • UCO Bank: Starting from 8.85% p.a.
  • Union Bank of India: Between 10.30% and 11.75%, based on loan category.
• Interest Concessions: Women entrepreneurs may receive an interest rate concession of up to 0.25%.

2. Repayment Terms

• Flexible Repayment: Designed to suit the cash flow of small businesses.
• Tenure: Generally ranges from 1 to 5 years, with some lenders extending up to 7 years for higher loan amounts.
• Moratorium Period: A grace period may be provided before principal repayment begins:
  • Loans below ₹5 lakh: Up to 6 months
  • Loans between ₹5 lakh and ₹20 lakh: Up to 12 months
• Working Capital Loans: Overdraft (OD) and Cash Credit (CC) facilities are usually repayable on demand and reviewed annually.

3. Other Key Terms

• Processing Fees: Usually nil for Shishu loans. For Kishore and Tarun loans, fees generally range from 0% to 0.50% plus applicable taxes.
• Collateral Requirement: No collateral or third-party guarantee is required for loans up to ₹10 lakh.

Banks and Financial Institutions Offering Mudra Loans

PM Mudra loans are available through public sector banks, private banks, regional rural banks, small finance banks, NBFCs, and microfinance institutions. However, eligibility rules, interest rates, documentation requirements, and processing speed can vary from lender to lender, so comparing lenders before applying can be helpful.

Bank	Starting Interest (Approx.)	Best For	Notes
SBI	12%+	Existing account holders	Popular e-Mudra option
PNB	9%+	Small businesses	Competitive rates
Bank of Baroda	Varies	New applicants	Wide branch network
Union Bank	10%+	MSMEs	Flexible loan options

How to Choose the Right Bank for Mudra Loan

Choosing a lender should not depend only on interest rates. Borrowers should also compare processing time, documentation requirements, repayment flexibility, and whether the bank has experience financing their type of business.

Questions to Ask Before Applying at a Bank

• What interest rate will apply to my category?
• Are there any processing fees?
• How long does approval usually take?
• Is a business plan required?
• Is moratorium available?

PM Mudra Loan EMI Calculator - Calculate Monthly EMI Online

Steps to Calculate Pradhan Mantri Mudra Loan EMI

1. Enter the loan amount you plan to borrow under the PM Mudra Loan scheme.
2. Select the interest rate offered by your bank or NBFC.
3. Choose the loan tenure (in months or years).
4. Click on “Calculate EMI.”
5. View your monthly EMI, total interest payable, and total repayment amount instantly.

PMMY Loan Disbursement Data (2024–2025)

PMMY has supported crores of borrowers since launch, showing strong adoption among small businesses. Recent policy changes such as Tarun Plus have also expanded access to higher-value funding.

Frequently Asked Questions