How to Apply for Mudra Loan (PMMY) — Pradhan Mantri Mudra Yojana

Looking to start or grow a small business in India? The Pradhan Mantri Mudra Yojana (PMMY) offers collateral-free loans up to ₹20 lakh to micro and small entrepreneurs. In this guide, we explain everything — what is Mudra Loan, who can apply, what documents you need, and how to apply online and offline.

What is Mudra Loan?

MUDRA stands for Micro Units Development and Refinance Agency. It was launched by the Government of India in April 2015 under the Pradhan Mantri Mudra Yojana (PMMY) to provide affordable credit to small and micro enterprises.

Key highlights:

• Loan amount: Up to ₹20 lakh
• Collateral: No collateral or guarantee required
• Who provides it: All public sector banks, private banks, regional rural banks (RRBs), small finance banks, MFIs, and NBFCs
• Purpose: Starting a new business or expanding an existing one in manufacturing, trading, services, or agriculture-allied activities

Note: Mudra Loan is not given directly by MUDRA. Your bank or lending institution sanctions and disburses the loan. MUDRA refinances the lender.

Mudra Loan Categories — Shishu, Kishore, Tarun

Mudra Loans are divided into three categories based on the loan amount and stage of business:

Shishu Loans

• Easiest to get — minimal documentation
• Ideal for street vendors, small shopkeepers, home-based businesses
• Many banks process Shishu loans within a few days

Kishore Loans

• For businesses with some track record
• Bank may ask for a brief business plan
• Useful for buying equipment, raw materials, or working capital

Tarun Loans

• Requires proper business documentation and financial records
• Bank may do a more detailed assessment
• Suitable for scaling up operations significantly

Who is Eligible for Mudra Loan?

You can apply for a Mudra Loan if you meet these conditions:

• You are an Indian citizen
• You are involved in a non-farm, income-generating business activity (manufacturing, trading, services, or agriculture-allied like food processing, poultry, fisheries)
• Your business is a micro or small enterprise (loan requirement up to ₹20 lakh)
• You can be a proprietor, partnership firm, or private limited company

Who Can Apply?

• Small shopkeepers and vendors
• Artisans and handicraft workers
• Food processing units
• Repair shops and service providers
• Small manufacturers
• Transport operators (auto, taxi, goods vehicle)
• Women entrepreneurs (priority under scheme)
• SC/ST/OBC category applicants (priority under scheme)

Who Cannot Apply?

• Existing loan defaulters (those with poor CIBIL/credit history)
• Applicants seeking loans for agriculture farming directly (crop loans are not covered)
• Businesses needing more than ₹20 lakh

Documents Required for Mudra Loan

The exact documents vary by bank and loan category. Here is the general list:

For All Categories

• Identity proof: Aadhaar card, Voter ID, PAN card, Passport, or Driving License
• Address proof: Aadhaar, utility bill, rent agreement, or Passport
• Passport-size photographs (2-3)
• Duly filled Mudra Loan application form (available at bank or online)

Additional for Kishore and Tarun

• Business proof: Shop licence, GST registration, Udyam registration, or business address proof
• Last 6 months' bank statements of business account
• Income Tax returns (last 2 years, if applicable)
• Business plan or project report (especially for Tarun)
• Quotation of machinery/equipment being purchased (if applicable)
• Category certificate (SC/ST/OBC, if claiming priority)

Tip: For Shishu loans, many banks only ask for Aadhaar, PAN, one photo, and a basic application. Keep all documents ready to avoid delays.

How to Apply for Mudra Loan — Step-by-Step

You can apply for Mudra Loan both online and offline (at a bank branch).

Method 1: Apply Online

Option A: Through Udyamimitra Portal

1. Visit udyamimitra.in
2. Click on "Apply for Loan" or register as a new user
3. Fill in your personal and business details
4. Select PMMY / Mudra Loan as loan type
5. Choose your preferred loan amount and category (Shishu/Kishore/Tarun)
6. Upload scanned copies of required documents
7. Submit the application
8. Multiple banks will review your application and you can choose the best offer
9. The bank will contact you for verification and further processing

Option B: Through PSB Loans in 59 Minutes

1. Visit psbloansin59minutes.com
2. Register with your details
3. Link your IT returns, GST, and bank account data
4. Get in-principle approval within 59 minutes
5. Visit the allotted bank branch to complete formalities

Option C: Through Bank's Own Website/App

Many banks like SBI, Bank of Baroda, PNB, and HDFC have a direct Mudra Loan application option on their website or mobile banking app. Check your bank's portal.

Method 2: Apply Offline (At Bank Branch)

1. Visit your nearest bank branch (any public or private sector bank)
2. Ask for the Mudra Loan application form
3. Fill in the application form carefully
4. Attach all required documents (self-attested photocopies)
5. Submit the form to the bank officer
6. The bank will verify your documents and may visit your business place
7. If approved, the loan amount will be credited to your account or disbursed as per terms

Processing time: Shishu loans may be approved in 7-10 working days. Kishore and Tarun may take 2-4 weeks depending on verification.

Mudra Loan Interest Rates

Mudra Loan interest rates are not fixed by the government. Each bank or lending institution sets its own rate. Here is a general range:

Important points about interest rates:

• Rates depend on the bank, your credit score, business type, and loan amount
• Women entrepreneurs and SC/ST applicants may get slightly lower rates at some banks
• There is no subsidy on Mudra Loan interest (unlike some other government schemes)
• Compare rates across 2-3 banks before applying
• Repayment tenure is usually 3 to 5 years, with some banks offering up to 7 years for Tarun loans

Mudra Card

Under the Shishu and Kishore categories, banks may issue a Mudra Card — a debit card linked to your loan account. This works like a credit facility where you can withdraw working capital as needed and repay it, similar to a credit card. This helps small businesses manage cash flow efficiently.

Benefits of Mudra Loan

• No collateral needed — your business idea is the security
• Available across India — through all major banks and NBFCs
• Low interest rates compared to personal loans
• Flexible repayment — 3 to 7 years tenure
• Women and SC/ST priority — easier approval for underserved groups
• Mudra Card for revolving credit facility

Frequently Asked Questions (FAQs)

1. Can I get a Mudra Loan without any business?

No. Mudra Loan is only for income-generating business activities. You need to have a business plan or an existing business. It is not a personal loan.

2. Is Mudra Loan available for agriculture?

Direct farming/crop loans are not covered. However, agriculture-allied activities like food processing, dairy, poultry, fisheries, and beekeeping are eligible.

3. What is the minimum CIBIL score required for Mudra Loan?

There is no official minimum, but most banks prefer a CIBIL score of 650 or above. For Shishu loans, banks may be more flexible. If you have an existing loan default, your application will likely be rejected.

4. Can I apply for Mudra Loan from any bank?

Yes. You can apply at any participating bank, NBFC, MFI, or small finance bank. You do not need to have an existing account with that bank, though having one may speed up the process.

5. Is there any processing fee for Mudra Loan?

It varies by bank. Some banks charge 0.5% to 1% processing fee. For Shishu loans, many banks waive the processing fee entirely. Always ask your bank about charges before applying.

6. Can I get a second Mudra Loan?

Yes, if you have repaid your first Mudra Loan successfully, you can apply for a second one. Banks may offer you a higher category (e.g., Kishore after Shishu) based on your repayment track record.

7. How long does it take to get a Mudra Loan?

Shishu loans can be approved in 7 to 10 working days. Kishore and Tarun loans typically take 2 to 4 weeks, depending on documentation and bank verification.

Summary

This guide is for informational purposes. Loan approval depends on the bank's assessment. Always verify latest details on the official MUDRA website or at your bank branch.