What is a MUDRA loan?
Pradhan Mantri MUDRA Yojana supports income-generating micro enterprises in non-agricultural activities and allied agricultural activities. Eligible lenders include banks, regional rural banks, small finance banks, NBFCs and microfinance institutions. Facilities may support a term requirement, working capital, or both.
The four MUDRA categories
| Category | Loan amount | Typical stage |
|---|---|---|
| Shishu | Up to INR 50,000 | Starting or stabilising a very small activity |
| Kishor | Above INR 50,000 and up to INR 5 lakh | Building an established micro business |
| Tarun | Above INR 5 lakh and up to INR 10 lakh | Expanding operations or productive capacity |
| Tarun Plus | Above INR 10 lakh and up to INR 20 lakh | For entrepreneurs who have successfully repaid a previous Tarun loan |
Tarun Plus became effective on 24 October 2024 and is available only within its stated repayment-history condition. Choose a category from the genuine project cost and funding need rather than treating the upper limit as a target.
Who can apply and what it can fund
- Micro manufacturing, trading and service enterprises with an income-generating activity.
- Allied agricultural activities recognised within the scheme framework.
- Equipment, tools, shop or workshop requirements and other productive assets.
- Working-capital needs linked to inventory and ordinary business operations.
- Eligible new or existing activities, subject to the lender's appraisal.
The proposal should connect each rupee requested to a productive business use. Personal consumption and unsupported cash requirements do not make a credible business case.
Documents and application process
- Applicant KYC and address proof.
- Business constitution and registration records, where applicable.
- Bank statements and evidence of existing business activity.
- Quotations or a cost estimate for the proposed use of funds.
- Financial statements, tax returns or projections appropriate to the business stage and loan size.
- Category-specific or lender-specific forms and declarations.
- Calculate the requirement
Prepare a simple project cost, promoter contribution and repayment estimate.
- Choose an eligible lender
Compare access, product structure, total cost and servicing arrangements.
- Submit the business case
Use accurate details and provide records that support the activity and amount.
- Complete appraisal
Answer queries and review all sanction terms before documentation.
Before accepting a MUDRA facility
- Confirm whether the facility is term loan, working capital or a combination.
- Review interest, processing charges, repayment dates and penal charges.
- Match instalments to the business's realistic cash cycle.
- Keep invoices and proof showing that funds were used for the sanctioned purpose.
- Deal directly with an eligible lender and be cautious of anyone promising guaranteed approval for an advance fee.
