Mudra Loan Yojana 2026 – Apply Online, Eligibility & Shishu Kishor Tarun Guide
Pradhan Mantri Mudra Yojana (PMMY) has become a lifeline for small business owners, shopkeepers, kirana stores, tailors, food stalls, salons, transporters and self-employed professionals in India. With collateral-free loans up to ₹10 lakh (and up to ₹20 lakh under the new Tarun Plus category), fast approvals and a healthy interest rate, Mudra is one of the easiest ways to fund a small business. Here's the complete 2026 guide.
What Is PM Mudra Yojana (PMMY)?
Launched in April 2015, PMMY provides micro-credit through banks, NBFCs, MFIs and small finance banks to non-corporate, non-farm enterprises in the manufacturing, trading and services sector. Loans are categorised based on amount sanctioned — Shishu, Kishor, Tarun and Tarun Plus. The Mudra refinances participating lenders, making sub-PLR rates and collateral-free disbursements possible.
4 Categories of Mudra Loan
| Category | Loan Amount | Typical Use |
|---|---|---|
| Shishu | Up to ₹50,000 | Vegetable cart, beauty salon kit, sewing machine, tea stall, vendor stock |
| Kishor | ₹50,001 – ₹5 lakh | Kirana store expansion, two-wheeler for delivery, small dairy unit |
| Tarun | ₹5 lakh – ₹10 lakh | Auto loan for cab, restaurant setup, small workshop, garments shop |
| Tarun Plus (NEW) | ₹10 lakh – ₹20 lakh | For borrowers who repaid earlier Tarun loans on time |
Tarun Plus was introduced in 2024 to support successful Mudra borrowers stepping up to slightly larger enterprises.
Who Is Eligible?
- Any Indian citizen above 18 years running or starting a non-farm, non-corporate income-generating activity.
- Manufacturing, processing, trading, services, or activities allied to agriculture (e.g., poultry, dairy, beekeeping, agarbatti making) — but not direct agriculture.
- Existing borrowers with a clean credit record can step up to Tarun Plus.
- No minimum CIBIL score legally mandated, but most banks prefer 650+. Even first-time borrowers without CIBIL can get Shishu.
Where to Apply
Mudra loans are disbursed by:
- All public sector banks (SBI, PNB, BoB, Canara, Indian Bank, UCO, BoI, Union, etc.)
- Private banks (HDFC, ICICI, Axis, Kotak, IDFC First, RBL, etc.)
- Regional Rural Banks (RRBs)
- Small Finance Banks (Equitas, Ujjivan, Suryoday, AU SFB)
- NBFCs and Micro Finance Institutions (MFIs)
Documents Required
- Mudra application form (different for Shishu vs Kishor/Tarun)
- 2 passport-size photographs
- PAN card and Aadhaar card
- Address proof — utility bill / rent agreement
- Business proof — GST certificate / Udyam registration / Shop & Establishment licence (where applicable)
- Quotation of machinery / vehicle / furniture (for new business)
- Last 6-12 months' bank statement
- For Kishor / Tarun: Income tax return of last 2 years, balance sheet
- SC/ST/OBC/Minority certificate (if any)
Step-by-Step Online Application
- Visit udyamimitra.in — the official portal for Mudra loans.
- Click "Apply Now" under Mudra Loan.
- Register with mobile + email; create user ID.
- Enter business details — type, location, vintage, monthly turnover, financial needs.
- Choose preferred lender — system can also match you with multiple banks.
- Upload scanned documents (PDF, max 2 MB each).
- Submit. Lenders contact you within 7-10 days.
- Bank verification / interview / site visit (for Kishor / Tarun).
- Sanction letter → loan agreement → disbursement to your business account.
Most banks also accept Mudra applications directly through their websites and apps — for SBI through "SBI e-Mudra" (up to ₹50,000 instant disbursal), HDFC Bank "Mudra Loan", Bank of Baroda "BOB World".
Interest Rate & Collateral
- Interest rate: 8.5% to 12% per annum, depending on bank and category. Public sector banks usually lower; private banks slightly higher.
- Collateral: No collateral required for loans up to ₹10 lakh under Mudra. The loan is covered under CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises).
- Processing fee: Shishu — Nil. Kishor / Tarun — 0.5% to 1% of loan amount (waived in many banks).
- Tenure: 3 to 5 years; up to 7 years for some asset-backed loans.
- Prepayment: Allowed without penalty in most public sector banks.
Common Reasons for Rejection & Fixes
| Rejection Reason | Solution |
|---|---|
| Poor CIBIL score (below 600) | Pay all dues, settle credit cards, wait 3-6 months and reapply |
| No proof of business activity | Get Udyam (MSME) registration first; takes 10 minutes |
| Bank statement shows low/inconsistent income | Maintain steady deposits for 6 months before re-applying |
| Applied without quotation/business plan | Prepare a 2-page project report with monthly cashflow |
| Bank requires guarantor unfairly | Approach SBI / PSU bank with Mudra-specific desk; complain to RBI Ombudsman if denied |
| Existing default with another bank | Clear default first; CGTMSE will not cover defaulters |
Frequently Asked Questions
Is Mudra loan really collateral-free?▼
Yes — by RBI and government guidelines, Mudra loans up to ₹10 lakh are completely collateral-free and third-party guarantee-free. The loan is covered under the Credit Guarantee Fund for Micro Units (CGFMU). Banks cannot legally insist on collateral. However, in practice, many private banks and even some PSU branches informally ask for property documents or PDC cheques. If denied, escalate to the branch manager → zonal office → RBI Banking Ombudsman (cms.rbi.org.in). Always insist on receiving written rejection if denied; SBI and PNB have dedicated Mudra desks at most branches.
How long does Mudra loan approval take?▼
For Shishu loans (up to ₹50,000), SBI e-Mudra offers near-instant disbursal — apply online with PAN + Aadhaar OTP + Udyam registration, and money is credited in 2-3 business days. Kishor (up to ₹5 lakh) typically takes 7-15 working days due to additional KYC and site verification. Tarun (up to ₹10 lakh) and Tarun Plus (up to ₹20 lakh) require detailed project reports and may take 21-30 working days. To speed things up, complete Udyam registration, keep 12 months' clean bank statements, and apply with the bank where you already maintain a current account.
Can I get a Mudra loan to start a brand new business?▼
Yes — Mudra loans are available for both existing businesses (expansion, working capital) and new ventures (machinery purchase, initial inventory, vehicle, shop fit-out). For new businesses, banks ask for: (1) detailed project report or business plan with cashflow projection, (2) quotation/proforma invoice for assets to be purchased, (3) some demonstration that you have the skill — for example, certificate from ITI for a workshop, or 6-12 months' experience as employee in a similar field. Start with Shishu category (₹50,000); after 1 year of repayment, upgrade to Kishor or Tarun.
Are there subsidies on Mudra loans?▼
Mudra loans themselves do not have direct interest subsidies under PMMY. However, several state and central schemes link with Mudra to provide interest subsidy or refund: (1) Stand-Up India for SC/ST/Women entrepreneurs, (2) PM Vishwakarma scheme for traditional artisans — first ₹1 lakh @ 5%, second ₹2 lakh @ 5% with interest subvention, (3) State-specific schemes like Tamil Nadu's NEEDS, Telangana's T-PRIDE, Maharashtra's CMEGP. Always ask your bank if any subvention scheme applies to your case. Women borrowers also get a 25-50 basis points interest concession in many banks.
Can I get a second Mudra loan after repaying the first?▼
Absolutely — and this is the core philosophy of Mudra: graduate borrowers from Shishu → Kishor → Tarun → Tarun Plus over time. If you have repaid your Shishu loan on time, you can apply for Kishor (₹50k-5L) for the next phase. After Kishor, you can take Tarun (₹5L-10L). The new Tarun Plus (₹10L-20L) is specifically for those who have successfully repaid a previous Tarun loan. Many small businesses in India have grown into mid-sized companies through this stair-step approach. The bank will check your repayment history — clean record = higher chances of bigger loan approval.