The Pradhan Mantri Mudra Yojana (PMMY) is one of India’s most influential government schemes aimed at supporting small and micro-entrepreneurs. Launched in 2015, the scheme has helped millions of individuals start or expand their small businesses by providing easy, collateral-free loans.
In a country where a large portion of the population depends on self-employment, small shops, street businesses, home-based units, and micro-enterprises, access to credit is often the biggest challenge. PM Mudra Yojana bridges this gap by offering loans with simple procedures, minimal documentation, and confidence for first-time business owners.
As of 2024–2025, the scheme continues to evolve with updated loan limits, digital enhancements, and better accessibility, ensuring that aspiring entrepreneurs can turn their ideas into reality.
What is PM Mudra Yojana?
The Pradhan Mantri Mudra Yojana (PMMY) is a government-backed scheme that provides loans to non-corporate, non-farm, small and micro businesses. The loan is provided through banks, NBFCs, and Micro-Finance Institutions.
- The loans are collateral-free
- No guarantor is required
- Borrowers receive a Mudra Card, which works like a debit card for business expenses
- The scheme is designed to promote self-employment and small enterprise growth
These loans are known as “Mudra Loans” and are supported by the Micro Units Development and Refinance Agency (MUDRA Ltd.), established by the Government of India.
Objectives of PM Mudra Yojana
The PM Mudra Yojana was created with a clear vision to empower small entrepreneurs. Its main objectives include:
1. Promote Small Businesses
To help micro-entrepreneurs start or expand businesses such as shops, manufacturing units, service centers, and small trade activities.
2. Generate Employment
By helping individuals start micro-enterprises, the scheme creates employment for others as well.
3. Improve Access to Finance
To provide easy, quick credit for people who usually struggle to get loans from banks due to a lack of collateral or financial history.
Support Underserved Sections of Society
A large portion of loans is offered to:
- Women entrepreneurs
- SC/ST and OBC applicants
- First-time businesses
- Rural and semi-urban entrepreneurs
Strengthen India’s Micro-Enterprise Ecosystem
PMMY aims to create a robust network of small and micro units that form the backbone of India’s economy.
Loan Categories under PM Mudra Yojana
To meet different business needs, the Mudra loans are divided into three major categories, plus an upgraded category introduced recently.
Shishu Loan (Up to ₹50,000)
This category is designed for beginners and first-time entrepreneurs.
Ideal for:
- Startups
- Small stalls
- Home-based workers
- Street vendors
Purpose: set-up cost, purchase of small tools, and raw materials.
Kishore Loan (₹50,000 to ₹5 lakh)
This category supports businesses that have already started but need funds for growth.
Ideal for:
- Small shops
- Manufacturing units
- Service centres
Purpose: expansion, machinery purchase, stock purchase.
Tarun Loan (₹5 lakh to ₹10 lakh)
This is meant for well-established small businesses ready for larger expansion.
Ideal for:
- Growing enterprises
- Medium-scale machinery
- Digital upgrades
Purpose: scaling operations, adding workforce, and renting business space.
Tarun Plus (Up to ₹20 lakh - NEW UPDATE)
In the 2024–25 financial budget, the loan limit under Mudra Yojana has been enhanced with the introduction of Tarun Plus, allowing eligible businesses to apply for up to ₹20 lakh.
This upgrade supports:
- High-growth micro-businesses
- Technology-driven small enterprises
- Manufacturing and productive services
This update makes Mudra Yojana more powerful for businesses aiming to scale faster.
Key Features of PM Mudra Yojana
PMMY comes with multiple benefits that make it one of the most popular schemes:
Collateral-Free Loans
No property, security, or guarantor is required to get the loan.
Low Processing Fees
Most banks charge minimal or zero processing fees for Shishu and Kishore loans.
Flexible Repayment Tenure
Borrowers can repay within 3 to 5 years, depending on the category and loan amount.
Business Debit Card (Mudra Card)
Borrowers get a Mudra Card to withdraw funds as required, giving better spending control.
For All Types of Micro Businesses
Applicable for:
- small shops
- workshops
- service centres
- food businesses
- artisans
- repair shops
- small manufacturing units
- local trade activities
Support for Women Entrepreneurs
Special interest concessions and priority lending help women start home-based or small businesses.
No Minimum Income Requirement
Unlike commercial loans, PMMY supports even those with no strong financial history.
Eligibility Criteria
To qualify for a Mudra Loan, an applicant must meet the following requirements:
1. Age Limit
- Minimum: 18 years
- Maximum: 65 years
2. Applicant Type
The scheme is available for:
- Individuals
- Sole proprietors
- Partnership firms
- Self-help groups
- Small manufacturers
- Traders
- Service providers
3. Business Type
Eligible businesses include:
- Non-farm enterprises
- Micro-manufacturing units
- Local transportation services
- Beauty parlours, salons, tailoring shops
- Retail shops and trading activities
- Small online or digital services
4. Purpose of Loan
The loan must be used for business activities like:
- Establishing a business
- Purchasing raw materials
- Buying tools or equipment
- Expanding operations
- Increasing working capital
5. Indian Citizenship
The applicant must be an Indian citizen with valid identity documents.
Documents Required for PM Mudra Yojana
The documentation process of the Mudra loan is simple and designed to help first-time entrepreneurs. However, applicants must keep the following documents ready to avoid delays:
- a) Identity Proof (Any one)
- Aadhaar Card
- PAN Card
- Voter ID
- Passport
- Driving Licence
- b) Address Proof
- Aadhaar
- Electricity bill
- Ration card
- Rental agreement
- Passport
- c) Business-Related Documents
- Business registration certificate (if applicable)
- GST registration (for larger units)
- Shop & Establishment license
- d) Financial Documents
- Bank statement for last 6–12 months
- ITR (if available, not mandatory for small loans)
- Financial projections (for larger loan categories)
- e) Business Plan
A simple business plan is often required, especially for Kishore, Tarun, and Tarun Plus loans.
It must include:
- Nature of business
- Estimated income and expenses
- Purpose of the loan
- How the business will repay
- f) Application Form
All banks or financial institutions have a standard Mudra Loan Application Form, which includes personal details, business information, loan amount, and declaration.
How to Apply for PM Mudra Yojana
You can apply through two modes: Online and Offline. The procedure remains simple and borrower-friendly.
A) Online Application Process
Although Mudra loans are mostly processed offline at banks, online platforms make the first step easier:
Step 1: Visit the official portal of the bank or the Udyami Mitra platform
- Udyami Mitra Portal: https://www.udyamimitra.in/
This portal connects applicants with banks and helps with digital applications.
Step 2: Register using basic details
- Name
- Phone number
- Aadhaar-linked mobile number
- Email (optional)
Step 3: Fill in the Mudra Loan application
Provide:
- Business category (Shishu/Kishore/Tarun)
- Requested loan amount
- Nature of business
- Documents uploaded (ID, address, business info)
Step 4: Application is forwarded to the bank
A bank officer will contact you for verification, additional documents, or a discussion of your business plan.
Step 5: Loan Approval & Mudra Card Issuance
Once approved, you receive:
- Funds are directly into your bank account
- Mudra Card for business transactions
B) Offline Application Process
Most applicants prefer offline mode because it is direct and quick.
Step 1: Visit a nearby bank
You can apply in:
- Public sector banks
- Private banks
- Regional rural banks (RRBs)
- Cooperative banks
- Small finance banks
- NBFCs and MFIs
Step 2: Ask for the Mudra Loan Application Form
Fill it carefully with personal and business details.
Step 3: Submit Documents
Attach: ID proof, address proof, business details, and bank statements.
Step 4: Discuss with Bank Manager
A short discussion may happen regarding:
- Business idea
- Feasibility
- Loan requirement
- Expected income
Step 5: Loan Sanction & Mudra Card
After verification and approval:
- Loan amount is sanctioned
- A Mudra Card is issued
- Repayment terms are shared
Benefits of PM Mudra Yojana
PMMY has transformed the micro-enterprise sector. Here are the major benefits:
- Collateral-Free Loans
No property, assets, or guarantor required, making it ideal for small businesses.
- Easy Approval Process
Minimal documentation and simplified procedure.
- Supports First-Time Entrepreneurs
People with no credit history or financial background can also apply.
- Encourages Self-Employment
Ideal for youth, women, and rural entrepreneurs to start small businesses.
- Flexible Repayment Options
Loan tenure ranges from 3 to 5 years, depending on the category.
- Mudra Card Advantage
Allows controlled spending and transparency in business expenses.
- Focus on Women & Disadvantaged Groups
A large percentage of loans go to:
- Women
- SC/ST
- OBC
- Rural households
- Uplifts Micro Businesses
Perfect for:
- shops
- tailoring units
- beauty parlours
- food stalls
- mobile repair shops
- service providers
- traders
- artisans
Risks and Challenges
Although popular, applicants should be aware of potential challenges:
- Possibility of Rejection
If the business plan is unclear or the documents are incomplete.
- Variable Interest Rates
Interest rates differ across banks and NBFCs.
- High Demand, Slow Processing
Due to heavy demand, approvals sometimes take time.
- Repayment Pressure
Entrepreneurs must ensure a steady income to manage EMIs.
- Fake Loan Agents / Scams
Applicants should only apply through official platforms or banks.
Impact & Statistics of PM Mudra Yojana
Since its launch, PMMY has made a massive economic impact:
- Over 40 crore loans sanctioned since 2015
Billions of rupees have been disbursed to micro businesses across India.
- 68% Borrowers are Women
The scheme is a major step for women’s entrepreneurship.
- 55% Loans in Rural Areas
PMMY supports rural economic growth and reduces migration.
- Rise in Self-Employment
Millions of people have opened small shops, food outlets, service centres, and home industries.
- Micro-Enterprise Growth
Repair shops, grocery stores, textile units, salons, food processing, and digital services have grown significantly.
Latest Updates (2024–2025)
The scheme recently underwent important updates to boost micro-entrepreneur growth:
1. Loan Limit Increased—Tarun Plus Introduced
The maximum loan limit has been extended up to ₹20 lakh for expanding businesses.
2. Digital Processing Improved
More banks are accepting online applications to reduce paperwork.
3. Faster Disbursement for Women
Banks have been instructed to prioritise women-led businesses.
4. Simplified Documentation for Small Units
Shishu loans now require very basic documents.
5. Focus on Rural Startups
Special push for rural manufacturing and village-based enterprises.
Tips to Increase Mudra Loan Approval Chances
Applying for a Mudra loan becomes easier when you follow these expert tips:
- Create a Simple but Clear Business Plan
Banks prefer clarity. Your plan should explain:
- What your business does
- How much money do you need
- How the loan will be used
- Estimated monthly earnings
- Repayment plan
- Keep All Documents Ready
Delayed submission often slows down approval.
Keep ID, address proof, bank statements, and business details organised.
- Maintain a Clean Bank Statement
Banks check your savings and transactions.
Avoid cheque bounces or irregular behaviour 3–6 months before applying.
- Start with a Smaller Loan (If First Time)
If you’re a beginner, applying for Shishu or Kishore increases approval chances.
- Be Honest and Confident During a Bank Interview
A short discussion with the loan officer may happen.
Explain your business in simple language.
- Show Genuine Purpose of the Loan
Use the loan strictly for business and not personal expenses.
- Apply at Your Existing Bank
Banks where you already have an account process loans faster.
Common Mistakes to Avoid (Important)
Many applicants face rejection because of avoidable errors:
- Incomplete Documents
Missing identity, address, or bank statements causes instant rejection.
- No Business Plan
Even a basic plan is essential for Kishore and Tarun loans.
- Overestimating Business Income
Banks cross-check your claims. Overconfidence may reduce trust.
- Applying Through Agents
Agents often charge high fees or give false promises.
Mudra loan is free, and you can apply directly at banks.
- Providing Wrong Information
False data on occupation, income, or business can get your loan rejected permanently.
- Multiple Applications at Different Banks
Avoid applying simultaneously to more than one bank.
Frequently Asked Questions (FAQs) – Most Searched on Google
These FAQs are taken from commonly searched queries like
“What is Mudra Yojana?”, “Who is eligible?”, “How to apply?”,
and long-tail questions trending on Google Search.
Q1. What is PM Mudra Yojana?
It is a government scheme that provides collateral-free loans up to ₹10 lakh (and up to ₹20 lakh under Tarun Plus) for small businesses.
Q2. Who is eligible for a Mudra loan?
Anyone running or planning to start a non-farm, non-corporate small business such as shops, services, trading, and small manufacturing units.
Q3. Is Mudra loan available without income proof?
Yes. Many banks offer Shishu and Kishore loans without income proof, but they may ask for bank statements.
Q4. What is the interest rate of Mudra loan?
Interest rates depend on the bank but usually range between 8% to 12% per annum.
Q5. Is collateral or security required?
No. Mudra loans are entirely collateral-free.
Q6. Can students apply for a Mudra loan?
Yes, if they want to start a business such as services, tuition, digital work, or startups.
Q7. How long is the repayment period?
Usually 3 to 5 years, depending on your business and category.
Q8. Can I apply online for a Mudra loan?
Yes. You can apply through:
- Udyami Mitra portal
- Bank website
- Bank branch (most common)
Q9. What is Mudra Card?
A debit-like card issued after loan approval.
It helps manage business expenses and withdrawals.
Q10. Why was my Mudra loan rejected?
Reasons may include:
- Weak business plan
- Incomplete documents
- Poor bank statement
- Multiple pending loans
- Low repayment capacity
Q11. Can I take Mudra loan for a new business?
Yes. PMMY supports new startups and first-time entrepreneurs.
Q12. Does Mudra loan cover vehicles?
Yes, for commercial use only (auto, taxi, loading vehicles).
Q13. Is subsidy available under Mudra?
There is no subsidy, except for borrowers under government-linked schemes like NRLM.
Q14. Can I take Mudra loan without PAN card?
Some banks allow Shishu loans without PAN, but PAN is preferred for higher amounts.
Q15. Does Mudra loan affect CIBIL score?
Yes. Timely repayments improve your credit score.
- Who Should Apply for Mudra Loan?
PMMY is ideal for:
- First-time entrepreneurs
- Small shop owners
- Women-led businesses
- Local manufacturers
- Home-based businesses
- Street vendors
- Service providers
- Traders
If you have a small business idea and need funds without security, a Mudra loan is perfect.
PM Mudra Yojana is one of India’s most powerful schemes for boosting micro-enterprises and self-employment. With simple eligibility, no collateral, and flexible repayment, it empowers millions of small businesses. This scheme has especially benefited women, rural youth, and first-generation entrepreneurs by giving them financial independence.
Whether you want to start a new business or expand an existing one, a Mudra loan can provide the necessary support.
Follow the proper process, prepare a clear business plan, and maintain clean financial habits to increase your approval chances.
