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It helps individuals and small businesses start or grow work in manufacturing, services, retail, and allied agricultural activities, supporting income and job creation.
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Mudra Loan
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A Mudra Loan is offered under the Government of India’s Pradhan Mantri MUDRA Yojana (PMMY) to support non-corporate, non-farm small and micro enterprises. Under this scheme, eligible borrowers can avail funding of up to ₹10 lakh to start a new venture, expand an existing business, or strengthen working capital requirements.
The scheme is implemented by Micro Units Development and Refinance Agency Limited (MUDRA), a government-backed NBFC dedicated to promoting entrepreneurship and financial inclusion among India’s micro and small business sector.
Mudra Loans are designed for income-generating activities across manufacturing, processing, services, trading, and allied agricultural sectors. Eligible borrower types include individuals, proprietorships, partnership firms, private limited companies, self-help groups, artisans, shopkeepers, hawkers, service providers, professionals, and small manufacturing or trading units.
Mudra Loan Categories
Under the Pradhan Mantri MUDRA Yojana, loans are structured into three stages based on business maturity and funding needs:
Shishu – Loans up to ₹50,000
Best suited for first-time entrepreneurs and micro businesses at the startup stage needing small capital to begin operations.
Kishore – Loans from ₹50,001 to ₹5 lakhs
Ideal for growing businesses requiring funds for expansion, equipment purchase, or increased working capital.
Tarun – Loans from ₹5 lakhs to ₹10 lakhs
Designed for established businesses planning scaling and diversification.
Tarun Plus – Loans from ₹10 lakhs to ₹20 lakhs
Designed for established businesses planning scaling, modernization, diversification, or capacity enhancement.
Mudra Loan Eligibility
Mudra Loans are accessible to a wide range of micro-enterprise participants:
- Individuals aged 18 to 65 years
- Existing or aspiring entrepreneurs
- Business owners and shopkeepers
- Small industrialists and manufacturers
- Service providers and professionals
- Individuals engaged in allied agricultural activities
- Self-help groups and micro enterprises
- Startup founders and small business units
Mudra Loan Products & Documentation
Shishu Loan
For entrepreneurs at the threshold of starting a business, Shishu loans provide funding up to ₹50,000.
Typical details required:
- Quotation for machinery or equipment to be purchased
- Details of plant and machinery acquired or proposed
- Supplier or vendor information
Kishore Loan
Kishore loans range from ₹50,000 to ₹5,00,000 and support businesses looking to expand operations or scale production.
Common documents required:
- Business balance sheets for the last two financial years
- Income tax and sales tax returns
- Bank statements for the previous 6 months
- Projected balance sheet for the next year or loan period
- Memorandum and Articles of Association (if applicable)
- Current financial year sales details
- Technical and economic feasibility or project report
Tarun / Tarun Plus Loan
Tarun loans range from ₹5,00,001 to ₹20,00,000 and are suited for established businesses seeking larger capital for growth or modernization.
Additional requirements (along with Kishore documents):
- Identity proof
- Address proof
- Category details (SC/ST/OBC/General, if applicable)
Documents Required
| Type of loan | Documentation |
|---|---|
| Vehicle Loans |
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| Business Instalment Loan |
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| Business Loans Group and Rural Business Credit |
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Activities Covered Under Mudra Loan
The Government of India’s Pradhan Mantri MUDRA Yojana supports a wide range of income-generating non-farm activities across services, manufacturing, trading, transport, and allied agriculture. Eligible borrowers can avail funding under Shishu, Kishore, or Tarun categories depending on business stage and capital needs.
Below is an expanded list of business activities commonly financed under Mudra Loans.
Community, Personal & Social Services
Mudra Loans support small service businesses that cater to everyday community needs and local employment.
Examples of eligible activities:
- Medical and pharmacy shops
- Boutiques and tailoring units
- Beauty parlours, salons, and spas
- Gyms and fitness centres
- Dry cleaning and laundry services
- Motorcycle and small vehicle repair shops
- Courier and delivery services
- Photocopying, printing, and DTP centres
- Mobile repair and electronics servicing
Transport & Vehicle Financing
Funding is available for purchasing commercial or passenger transport vehicles used for income generation.
Eligible vehicles and uses:
- Goods carriers and delivery vans
- Auto-rickshaws and three-wheelers
- E-rickshaws and electric cargo vehicles
- Passenger taxis and cabs
- Small tourist or school transport vehicles
- Cold-chain and refrigerated transport
Food Processing & Small Food Businesses
Mudra Loans encourage micro food enterprises and local food production units.
Examples:
- Pickle, papad, jam, jelly, and snack making
- Homemade or packaged food production
- Small catering and tiffin services
- Street food stalls and kiosks
- Bakery units (bread, buns, cakes)
- Ice-cream or frozen dessert units
- Mini cold storage and food preservation
- Food processing and packaging units
Shopkeepers, Traders & Retail Businesses
Individuals running shops or trading enterprises can avail Mudra Loans for working capital and business expansion.
Eligible activities:
- Grocery and general stores
- Hardware or electrical shops
- Stationery and book stores
- Garment and textile retail
- Household goods and appliance shops
- Wholesale or distribution businesses
- Service and repair shops
- E-commerce or local trading ventures
Textile & Handicraft Sector
Mudra supports traditional and modern textile-related activities, helping artisans and small manufacturers.
Examples:
- Handloom and powerloom units
- Embroidery (zari, zardozi, chikan work)
- Knitting and garment stitching
- Computerised embroidery units
- Dyeing and printing units
- Khadi and village industry products
- Apparel design and tailoring
- Non-garment textile products
Agriculture & Allied Non-Farm Activities
While core farming is excluded, Mudra covers many allied income-generating rural activities.
Eligible activities:
- Beekeeping (apiculture)
- Fisheries and pisciculture
- Poultry and livestock rearing
- Dairy-related micro enterprises
- Agri-clinics and agri-service centres
- Sorting, grading, and packaging units
- Rural food processing activities
Equipment Finance for Micro Units
Mudra Loans can be used to purchase machinery or equipment required to start or expand micro-enterprises.
Examples:
- Manufacturing machinery
- Workshop tools and equipment
- Food processing machines
- Textile or tailoring machines
- Service-sector equipment
- Small industrial plant setup
Funding Support Available Under Mudra
The Micro Units Development and Refinance Agency Limited (MUDRA) provides multiple funding and refinance mechanisms to strengthen micro-enterprise lending across India.
Micro Credit Scheme
- Loans up to ₹1 lakh for micro-enterprise activities
- Primarily for Joint Liability Groups (JLGs) and Self-Help Groups (SHGs)
- Offered through Microfinance Institutions (MFIs) registered with MUDRA
Women Enterprise Programme
Special incentives are provided to encourage women entrepreneurship.
Key features:
- Interest rate concession (typically 0.25% lower)
- Preferential lending support to women-led businesses
- Offered through MFIs and NBFC partners
Refinance Support to Banks
MUDRA provides refinance assistance to lending institutions financing micro-enterprises.
Eligible institutions:
- Regional Rural Banks (RRBs)
- Scheduled Commercial Banks
- Cooperative Banks
Features:
- Refinance up to ₹10 lakh per unit
- Working capital or term loan support
- Applicable across Shishu, Kishore, and Tarun loans
Securitisation & Portfolio Support
MUDRA also supports NBFCs, MFIs, and banks by participating in securitisation of micro-loan portfolios.
This improves liquidity for lenders and expands credit access to micro and small businesses.
Overall, Mudra Loans cover a broad spectrum of service, trading, manufacturing, transport, and allied rural activities — enabling entrepreneurship, self-employment, and local job creation across India’s micro-enterprise ecosystem.
Benefits of taking a Mudra Loan
The Pradhan Mantri MUDRA Yojana (PMMY) is designed to make business financing accessible, affordable, and inclusive for micro and small enterprises across India. Here are the key features and advantages of opting for a Mudra Loan:
Wide Accessibility Across India
Mudra Loans are available in both rural and urban areas through banks, NBFCs, and microfinance institutions — expanding formal credit access nationwide.
Supports Micro & Small Businesses
Entrepreneurs, shopkeepers, vendors, artisans, and startups can obtain financial backing to start or grow small income-generating businesses.
Affordable Loan Amounts & Interest
Loans are available in small, flexible ticket sizes at competitive interest rates, making borrowing manageable for early-stage businesses.
Collateral-Free Financing
Mudra Loans do not require collateral or security, reducing barriers for first-time borrowers and small entrepreneurs.
Government Credit Guarantee Support
Loans are backed under government guarantee mechanisms, encouraging lenders to support micro-enterprise borrowers with reduced risk.
Promotes Financial Inclusion
The scheme brings formal financial services to underserved and unbanked populations who may lack access to traditional banking.
Flexible Repayment Tenure
Repayment periods can extend up to 7 years, allowing businesses adequate time to stabilize and generate returns.
Special Benefits for Women Entrepreneurs
Women borrowers may receive concessional interest rates and priority lending support to encourage women-led enterprises.
Refinance Support for Lenders
Through Micro Units Development and Refinance Agency Limited, banks and financial institutions receive refinance assistance, increasing credit flow to small businesses.
Micro Credit for Self-Employment
Individuals or groups seeking self-employment through micro-enterprise activities can access funding under the Micro Credit Scheme.
Supports National Manufacturing & Enterprise Growth
Mudra complements initiatives like Make in India by encouraging small manufacturing, services, and trading businesses.
Dedicated for Business Purposes
Funds are intended specifically for productive, income-generating activities — ensuring capital is used for enterprise development.
Eligible for Indian Citizens
Indian citizens aged 18–65 engaged in non-farm income-generating activities can apply under the scheme.
Overall, Mudra Loans provide accessible, collateral-free, and government-supported financing that empowers small entrepreneurs, promotes self-employment, and strengthens India’s micro-enterprise ecosystem.
Documents
Provide the following KYC documents for evaluation of your loan-worthiness
- PAN Card.
- Salary Slips (Last 3 months).
- Bank Statement of Salary Account
(3/6 months). - Address Proof.