PM Mudra Loan Yojana
PM Mudra Loan Yojana offers collateral-free loans up to ₹10 lakh for new or existing small businesses, startups, traders, and MSMEs in India. Apply easily.
In this article:
What is PM Mudra Loan Yojana?
PM Mudra Loan Yojana (Pradhan Mantri Mudra Yojana/PMMY) was actually started in April 2015 by Central Government to help micro and small entrepreneurs and business owners, so that they can get loan for income-generating activities without much hassle. Through this scheme, non-corporate, non-farm small businesses can take loans up to ₹10 lakh (some banks gives till ₹20 lakh now). Main aim is to promote startup culture and self-employment in India so that people do not face issues in getting loan
Key Benefits of Mudra Loans
Anyone who is planning to start small manufacturing unit, trading, shop, or service business, can apply for Mudra loan and grow their business. Some main benefits are:
No collateral required: You do not have to give security or mortgage for most Mudra loans.
Flexible loan amounts: Loans available from ₹50,000 up to ₹10 lakh or ₹20 lakh.
Very low interest rate: Most Mudra loans start from 9.30% p.a. but can vary by bank.
No processing fee: Most banks don’t charge anything to process your loan.
For all sectors: Manufacturing, trading, service, even related agriculture but not agri crop loans.
Types of Mudra Loans
Shishu Mudra Loan (upto ₹50,000)
If your business or startup is just new or at growing stage, Shishu loan is for you. You can get up to ₹50,000 easily, mainly for new businesses. You have only basic documents requirement and process is quick.
Kishor Mudra Loan (₹50,001 to ₹5 lakh) (H3)
If you've already started but want to expand, take Kishor loan. Range is ₹50,001 to ₹5 lakh. Need more documents and some plan about utilisation, but approval rates are good especially with government banks.
Tarun Mudra Loan (₹5 lakh to ₹10 lakh)
Established entrepreneurs and MSMEs can apply for Tarun loans, from ₹5 lakh to ₹10 lakh. This is usually given for expansion, machine purchase, hiring, or other business growth needs. Documentation is little more strict, but the process is much easy compared to private business loans due to government guarantee.
Eligibility Criteria for PM Mudra Loan
To get Mudra loan in 2025, applicant have to meet basic eligibility:
Age should be 18-65 years.
Indian citizen with valid ID (Aadhaar, PAN card, Voter ID etc).
Have proper business plan for income generation (can be new/old business).
No bad loan default record, but banks sometimes check creditworthiness.
Business type: Trading, manufacturing, service enterprises; startups also eligible.
Agriculture crop/land loans are not eligible under PMMY (agri-related like fishery/horticulture included).
Required Documents for Mudra Loan
Applying for a PM Mudra Loan is easy if you have these documents ready:
Duly filled Mudra loan application form (available at branch / online).
Latest passport photo(s) of applicant
Aadhaar/PAN card/Driving license/Voter ID for identity proof.
Address proof (Bank statement, electricity bill, Aadhaar, Voter ID).
Business existence proof (Business registration/license/UDYAM/MSME certificate etc).
Category proof (SC/ST/OBC/minority certificate if applies).
Bank account passbook / last 6 month statement.
Quotation for machinery, business expansion plans
Other documents as required by bank
Interest Rate and Repayment Period
Major government banks starts Mudra loan interest rate from 9.30% (can go higher upto 12-14% by bank and applicant profile). Repayment period ranges from 5 years for small loans to even 7 years for higher amounts. Some loans up to ₹5 lakh have max period 5 yrs, and ₹5-10 lakh Tarun loans can go for max 7 years. There is no penalty for early closure in most banks.
How to Apply for Mudra Loan
Applying for PMMY loan in 2025 is simple, many government banks offers online application as well:
Visit nearest government bank branch like SBI, Bank of Baroda, PNB, BOI, etc.
Ask for Mudra loan form, or download it from bank/Mudra official website.
Fill form and attach document list, photo, proofs as above
State loan amount needed, business plan and loan utilization (banks checks details, especially for bigger loan)
Submit all documents; bank official will check, verify and process your loan.
If accepted, you get loan directly in account
Some banks like SBI, Bank of Baroda also allow online application via their websites. After approval you can use the funds for business purpose only like buying goods, inventory, payment to vendors, machinery, rent, hiring etc.
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Frequently Asked Questions
Anyone with proper business plan for manufacturing, trading, service, startup, etc can apply - individual, partnership, company, even women and SC/ST/OBC.
Yes, most banks now have online Mudra loan application facility, but for big amount, branch visit is better.
No, Mudra loans are collateral-free, but assets purchased from loan remains under bank lien till repayment.