PM MUDRA Loan Yojana 2026: Shishu, Kishore, Tarun & Tarun Plus Explained
Access to capital remains one of the biggest challenges for small businesses in India. Many entrepreneurs struggle to secure funding due to lack of collateral. To bridge this gap, the Government of India launched Pradhan Mantri MUDRA Yojana (PMMY), a scheme designed to provide collateral-free loans to micro and small enterprises.
Under PMMY, eligible businesses can obtain funding up to ₹20 lakh without pledging assets as security. This guide explains loan categories, eligibility, documents required, and how to apply online.
What is Pradhan Mantri MUDRA Yojana (PMMY)?
Launched in April 2015, PMMY supports non-farm micro enterprises engaged in manufacturing, trading, and service activities. MUDRA stands for Micro Units Development and Refinance Agency. The objective is to strengthen small businesses by improving access to institutional credit.
Loans are offered through banks, NBFCs, and Micro Finance Institutions. These loans are unsecured and processed based on the viability of the business.
PM MUDRA Loan Categories and Loan Amount
PMMY loans are divided into four segments depending on business stage and funding requirement:
| Category | Loan Amount | Ideal For |
|---|---|---|
| Shishu | Up to ₹50,000 | Startups, vendors, small traders |
| Kishore | ₹50,000 – ₹5 lakh | Growing businesses |
| Tarun | ₹5 lakh – ₹10 lakh | Expansion stage enterprises |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Businesses scaling operations further |
1. Shishu Loan
Designed for newly started businesses. Funds can be used for inventory purchase, equipment, or setting up small units.
2. Kishore Loan
Suitable for enterprises seeking working capital or small-scale expansion.
3. Tarun Loan
Best for businesses with established operations aiming for growth or modernization.
4. Tarun Plus Loan
Available to businesses that have successfully repaid a Tarun loan and require higher funding support.
Eligibility Criteria for MUDRA Loan
- Applicant must be between 18 and 65 years of age.
- Business must be a non-farm enterprise.
- Loan requirement should not exceed ₹20 lakh.
- Valid business plan required.
- Applicable to individuals, partnerships, companies, and proprietorships.
Documents Required
Basic Documents (All Categories)
- Identity proof (Aadhaar, PAN, Passport, etc.)
- Address proof
- Recent photographs
- Bank statements
- Business details
Additional Documents (Kishore, Tarun, Tarun Plus)
- Business registration certificate
- Financial statements
- Machinery or equipment quotations
- Income and liability statements
How to Apply for MUDRA Loan Online
- Select appropriate loan category.
- Visit official website of participating bank or NBFC.
- Fill application form with business details.
- Upload required documents.
- Wait for credit evaluation and approval.
- Loan amount credited upon approval.
Key Benefits of PMMY
- No collateral required
- Quick processing
- Flexible repayment options
- Support for small and micro enterprises
- Lower interest rates compared to informal borrowing
Frequently Asked Questions (FAQs)
1. What is the maximum loan amount under PMMY?
Up to ₹20 lakh under Tarun Plus category.
2. Is collateral required for MUDRA loans?
No, these loans are unsecured.
3. Who can apply for a MUDRA loan?
Individuals and entities operating non-farm micro businesses.
4. Are students eligible?
Yes, if they meet age and business criteria.
5. Is there any subsidy?
No direct subsidy, but loans may fall under credit guarantee schemes.
6. What is the interest rate?
Rates vary depending on lender and loan category.
7. How long does approval take?
Processing time varies but is generally a few working days.
8. Can loan funds be used for personal purposes?
No, funds must be used strictly for business needs.