If you run a kirana, salon, tailoring unit, tiffin service or small workshop and need money to grow, the Pradhan Mantri MUDRA Yojana (PMMY) is the first scheme to check. Loans come without collateral, and since October 2024 the ceiling is ₹20 lakh under a new Tarun Plus category.
Key takeaway: Mudra loans are for non-farm income-generating micro businesses. Four tiers: Shishu up to ₹50,000, Kishor up to ₹5 lakh, Tarun up to ₹10 lakh, and Tarun Plus ₹10–20 lakh for borrowers who have repaid a Tarun loan. No collateral; apply at any bank, NBFC or MFI, or online on JanSamarth.
Proof matrix
| Item | Detail | Source |
|---|---|---|
| Scheme | Pradhan Mantri MUDRA Yojana, launched April 2015 | MUDRA |
| Ceiling raised | ₹10 lakh → ₹20 lakh (announced Budget 2024-25; notified October 2024) | Ministry of Finance |
| Tarun Plus eligibility | Only borrowers who have taken and repaid a Tarun loan | Ministry of Finance |
| Collateral | None; loans covered by the Credit Guarantee Fund for Micro Units (CGFMU) | MUDRA / lender terms |
| Interest rate | Set by each lender as per RBI guidelines — not fixed by the scheme | MUDRA |
Mudra loan categories
| Category | Loan amount | Typical use |
|---|---|---|
| Shishu | Up to ₹50,000 | Street vendor cart, first stock, tools |
| Kishor | ₹50,001 – ₹5 lakh | Shop fit-out, sewing machines, working capital |
| Tarun | ₹5 lakh – ₹10 lakh | Machinery, second outlet, delivery vehicle |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Expansion for proven repayers |
Who can get a Mudra loan?
- Individuals, proprietorships, partnerships and small companies running a non-farm income-generating activity in manufacturing, trading or services.
- Activities allied to agriculture such as dairy, poultry, fisheries and bee-keeping also qualify.
- You should not be a defaulter with any bank or financial institution.
- Personal needs (a wedding, a home renovation) do not qualify — the loan must fund a business.
What will the EMI be?
Rates differ by lender and credit profile. After RBI's October 2026 repo hike, many repo-linked MSME loans are pricing in the 10–12% range. Illustration:
| Loan | Rate (example) | Tenure | EMI | Total interest |
|---|---|---|---|---|
| ₹4 lakh (Kishor) | 11% | 3 years | ₹13,095 | ₹71,438 |
| ₹15 lakh (Tarun Plus) | 10.5% | 5 years | ₹32,241 | ₹4,34,451 |
Documents you will need
- KYC: Aadhaar and PAN of the owner/partners.
- Business proof: Udyam certificate, GST registration or shop licence.
- Address proof of the business premises.
- Last 6–12 months of bank statements.
- For Kishor and above: ITR and simple financials (Profit & Loss, Balance Sheet) and a project report or machinery quotation.
How to apply: step by step
- Decide the amount and write down exactly what it will buy (stock, machine, vehicle).
- Apply online on JanSamarth (jansamarth.in) or visit your bank branch, regional rural bank, small finance bank, NBFC or MFI.
- Submit the documents above. The lender appraises the business and may visit.
- On sanction, check the interest rate, processing fee and CGFMU guarantee fee in writing before you sign.
- Repay on time — a clean Tarun record is what opens the ₹20 lakh Tarun Plus door.
Before you apply: pitfalls
- Paying an "agent" to get a Mudra loan. There is no middleman in the scheme.
- Applying with no records. A lender trusts numbers: monthly sales, expenses and dues.
- Mixing personal and business money in one account — it weakens your bank statement.
- Skipping the guarantee fee line. Some lenders pass the CGFMU fee to the borrower.
Prepare your loan file and track EMIs in DAM
Steps use DAM's in-app search.
- Open Search and type Profit & Loss for the last financial year, and Balance Sheet for assets and liabilities. Export both for the lender.
- After sanction, search Loans & Advances, tap New loan, choose Loan taken and enter the amount, Interest rate (%) and No. of instalments.
- Tap Generate instalment dates and check the Repayment preview so you never miss an EMI.
Show the bank clean books
Profit & Loss and Balance Sheet from your daily bills — the first thing a loan officer asks for.
Frequently Asked Questions
What is the maximum Mudra loan amount in 2026?
₹20 lakh, under the Tarun Plus category, for borrowers who have repaid an earlier Tarun loan.
Is collateral needed for a Mudra loan?
No. Loans are covered by the Credit Guarantee Fund for Micro Units.
What is the Mudra loan interest rate?
There is no fixed scheme rate. Each lender sets it under RBI guidelines based on your profile.
Can I apply online?
Yes, through the JanSamarth portal or your bank's online channel.
Sources
Content checked on 23 October 2026. PM MUDRA Yojana · JanSamarth portal · Taxguru: Mudra limit raised to ₹20 lakh (Tarun Plus) · Indian Bank: Tarun Plus scheme terms.
Disclaimer: This guide is for educational purposes only and does not constitute formal tax, legal or financial advice. Loan approval, rates and fees are decided by the lender. Verify with a registered Chartered Accountant (CA) before acting.