The PM MUDRA Yojana is one of India’s most accessible and underutilised loan schemes. Since 2015, it has disbursed over ₹27 lakh crore to small business owners across India — yet millions of eligible entrepreneurs still haven’t applied because they don’t know how it works.
This guide explains everything: what MUDRA is, who qualifies, how much you can get, and exactly how to apply in 2026.
What is PM MUDRA Yojana?
MUDRA stands for Micro Units Development and Refinance Agency. Launched in April 2015, it provides loans up to ₹10 lakh to non-corporate, non-farm small and micro enterprises — without requiring any collateral.
MUDRA itself doesn’t lend directly. It provides refinancing to banks, MFIs (Microfinance Institutions), and NBFCs that in turn lend to borrowers under the MUDRA scheme.
Three Types of MUDRA Loans
| Category | Loan Amount | Best For |
|---|---|---|
| Shishu (Infant) | Up to ₹50,000 | Very early stage, first-time entrepreneurs, micro vendors |
| Kishor (Adolescent) | ₹50,001 – ₹5,00,000 | Established micro businesses looking to expand |
| Tarun (Youth) | ₹5,00,001 – ₹10,00,000 | Growing small businesses with track record |
A new category — Tarun Plus — was introduced for businesses that have successfully repaid a Tarun loan, offering up to ₹20 lakh.
Who is Eligible for a MUDRA Loan?
You qualify if:
- You are an Indian citizen above 18 years of age
- You are starting or expanding a non-farm micro or small enterprise
- Your business is in manufacturing, trading, services, or allied activities
- You don’t have a history of loan default with any bank or NBFC
- Your business requires funds up to ₹10 lakh (₹20 lakh for Tarun Plus)
Business types that qualify:
- Small shops (kirana stores, medical stores, general merchandise)
- Street vendors and hawkers
- Food processing and food stalls
- Tailoring and garment manufacturing
- Beauty salons and parlours
- Repair workshops (mobile, electronics, vehicles)
- Transport (auto, taxi, goods vehicle)
- Digital services and small IT firms
- Agriculture-allied activities (poultry, fisheries, beekeeping)
- Small manufacturing units
You do NOT qualify if:
- Your business is in agriculture/farming (separate Kisan Credit Card scheme for that)
- You need more than ₹10 lakh (consider CGTMSE-backed loans instead)
- You have an existing NPA (Non-Performing Asset) with any lender
MUDRA Loan Interest Rate in 2026
MUDRA does not fix a single interest rate — rates vary by lender and borrower profile. Here are typical ranges:
| Lender Type | Typical Interest Rate |
|---|---|
| Public Sector Banks (SBI, PNB, Bank of Baroda) | 8.5% – 12% per annum |
| Private Banks (HDFC, ICICI, Axis) | 10% – 14% per annum |
| NBFCs (Lendingkart, Mahindra Finance) | 12% – 18% per annum |
| MFIs (SKS, Ujjivan, Equitas) | 18% – 24% per annum |
Tip: Always approach public sector banks first for the lowest rates. SBI’s MUDRA loan (called “SBI e-Mudra”) is available fully online for amounts up to ₹1 lakh.
Documents Required for MUDRA Loan
For Shishu Loans (up to ₹50,000):
- Aadhaar card (identity + address proof)
- PAN card
- 2 recent passport-size photographs
- Quotation for equipment/goods to be purchased (if applicable)
- Bank account details
For Kishor & Tarun Loans (₹50,001 – ₹10 lakh):
- All of the above, plus:
- Business registration documents (GST certificate, Udyam certificate, or shop license)
- Last 6 months’ bank statements
- ITR for last 1–2 years (if available)
- Business plan / project report (simple 2–3 page document explaining what you’ll do with the money)
- Trade references or supplier invoices (for established businesses)
How to Apply for MUDRA Loan: Step-by-Step
Method 1: Online via Jan Samarth Portal (Easiest)
- Visit jansamarth.in
- Click “Business Activity Loan” → MUDRA
- Register with your Aadhaar and mobile number
- Fill the application form (takes 15–20 minutes)
- Upload documents
- Your application is shared with multiple lenders simultaneously
- A lender contacts you within 5–7 working days
Method 2: SBI e-Mudra (For Up to ₹1 Lakh)
- Visit sbi.co.in/web/personal-banking/loans/micro-loans/e-mudra-loan
- You need an existing SBI savings/current account
- Apply online — approval can come within minutes for amounts up to ₹50,000
Method 3: Direct Bank Branch
- Visit any public sector bank branch near you
- Ask specifically for “MUDRA loan under PM MUDRA Yojana”
- Collect and submit the application form with documents
- Processing time: 7–21 working days
Method 4: MUDRA’s Own Portal
Visit mudra.org.in to find a list of all authorised lenders and apply through any of them.
How Long Does MUDRA Loan Approval Take?
| Loan Category | Typical Approval Time |
|---|---|
| Shishu (up to ₹50K) via SBI e-Mudra | Few minutes to 2 days |
| Shishu at bank branch | 3–10 working days |
| Kishor (up to ₹5L) | 7–21 working days |
| Tarun (up to ₹10L) | 14–30 working days |
Common Reasons MUDRA Loans Get Rejected
- CIBIL score below 700: Check your score before applying. Most banks want 700+. If yours is lower, start with an MFI which has more flexible criteria.
- Incomplete documents: Missing bank statements or business proof are the most common rejection reason. Have everything ready before submitting.
- No business proof: Even a Udyam certificate or a shop license significantly improves approval chances. Get Udyam registration first (free, 10 minutes at udyamregistration.gov.in).
- No clear use of funds: Banks want to know exactly how you’ll use the money. A simple 1-page plan helps enormously.
- Applying to the wrong lender: Some banks have higher loan rejection rates. SBI, Bank of Baroda, and Union Bank of India tend to have higher MUDRA approval rates among PSBs.
MUDRA Loan vs Other Options: Which is Right for You?
| Need | Best Option | Why |
|---|---|---|
| Under ₹50,000, very quick | MUDRA Shishu / SBI e-Mudra | Fastest approval, minimal docs |
| ₹50K – ₹10L, small business | MUDRA Kishor/Tarun | No collateral, low rates |
| ₹10L – ₹50L, MSME | CGTMSE-backed bank loan | Government guarantee, no collateral |
| Starting new, need subsidy | PMEGP | 15–35% capital subsidy |
| Woman entrepreneur | Standup India | Up to ₹1 crore |
Find All Schemes You Qualify For
MUDRA might not be your only option. Depending on your business type, stage, and founder profile, you may qualify for additional subsidies, grants, or lower-interest loans. Our Scheme Finder checks all central and state schemes in one go.
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