Mudra Loan Types: Shishu, Kishore, Tarun — Limits, Interest Rates, Eligibility

Under the Pradhan Mantri Mudra Yojana (PMMY), loans are categorised into three types based on the stage and funding needs of your business: Shishu, Kishore, and Tarun. Each category has different loan limits, eligibility criteria, and documentation requirements.

This guide compares all three types so you can choose the right one before applying for a Mudra loan.

Quick Comparison: Shishu vs Kishore vs Tarun

Shishu Loan (Up to ₹50,000)

Who Should Apply?

Shishu loans are designed for new entrepreneurs and very small businesses that need seed capital to get started. This is ideal if you:

• Are starting a small shop, stall, or home-based business
• Need working capital for raw materials or inventory
• Are a street vendor, artisan, or home-based worker
• Have no prior business loan history

Key Features

• No collateral required
• No processing fee charged
• Minimal documentation — Aadhaar, PAN, and basic business proof
• No business plan required in most cases
• CIBIL score requirements are relaxed — even first-time borrowers with no credit history can apply
• Fastest approval among all Mudra categories

Best For

• Street food vendors
• Tailors and seamstresses
• Small repair shops
• Beauty parlours (home-based)
• Auto-rickshaw or taxi drivers
• Handicraft artisans

How to Apply

Follow our step-by-step Mudra Loan Application Guide. For Shishu, you can often walk into any bank branch with just Aadhaar, PAN, and a photo.

Kishore Loan (₹50,001 to ₹5,00,000)

Who Should Apply?

Kishore loans are for businesses that are already running and need funds to grow. This is right for you if you:

• Already have a running business and need expansion capital
• Want to purchase equipment or machinery
• Need higher working capital for increasing orders
• Have some business track record (6+ months)

Key Features

• No collateral required
• Business plan required — a simple plan showing how funds will be used
• Bank statements for last 6 months needed
• CIBIL score of 650+ preferred
• Processing fee of 0.5%–1% may apply
• Repayment tenure up to 5 years

Best For

• Small manufacturing units
• Established shop owners expanding inventory
• Service businesses investing in equipment
• Traders increasing working capital
• Small restaurants and food businesses

Documents Needed

In addition to basic ID and address proof, Kishore applicants need:

• Business registration (Udyam, GST, or Shop Act licence)
• Bank statements (6 months)
• Business plan with financial projections
• Quotations for assets to be purchased (if applicable)

📋 Full list: Mudra Loan Documents Required

Tarun Loan (₹5,00,001 to ₹10,00,000)

Who Should Apply?

Tarun loans are for established businesses ready for significant expansion. Apply if you:

• Have a well-established business with proven revenue
• Need substantial funds for machinery, premises, or large inventory
• Plan to expand operations, open a new branch, or diversify
• Have a strong business track record (1+ year preferred)

Key Features

• No collateral required (this is a key PMMY benefit)
• Detailed business plan required with revenue projections
• Strong CIBIL score needed — 700+ gives best chances
• Income proof — ITR, profit & loss statement, or audited financials
• Processing fee of 0.5%–1%
• Repayment tenure up to 7 years
• Banks conduct thorough credit appraisal

Best For

• Manufacturing units buying heavy machinery
• Businesses opening second location
• Traders scaling up operations significantly
• Service businesses with large capital needs
• Entrepreneurs with proven track record seeking growth capital

Documents Needed

Tarun requires the most comprehensive documentation:

• All basic documents (Aadhaar, PAN, photos)
• Detailed business plan with 2–3 year projections
• Last 2 years ITR (if filed)
• Profit & Loss and Balance Sheet
• Bank statements (12 months)
• Business registration documents
• Quotations for assets to be purchased

How to Choose the Right Mudra Loan Type

Choose Shishu If:

• ✅ You're a new entrepreneur
• ✅ You need less than ₹50,000
• ✅ You don't have business registration yet
• ✅ Your CIBIL score is low or you have no credit history
• ✅ You want quick approval with minimal paperwork

Choose Kishore If:

• ✅ Your business is already running
• ✅ You need ₹50,000 to ₹5 lakh
• ✅ You have basic business registration
• ✅ Your CIBIL score is 650+
• ✅ You can prepare a business plan

Choose Tarun If:

• ✅ Your business is established with proven revenue
• ✅ You need ₹5 lakh to ₹10 lakh
• ✅ You have comprehensive documentation
• ✅ Your CIBIL score is 700+
• ✅ You have filed ITR and can show financials

Can You Upgrade from One Category to Another?

Yes! Many borrowers start with Shishu and gradually move up:

1. Take a Shishu loan → repay on time
2. Build credit history and business track record
3. Apply for Kishore after 6–12 months
4. Eventually apply for Tarun as your business grows

This "step-up" approach is recommended, especially for first-time borrowers with no credit history.

Interest Rates by Category

Interest rates are set by individual banks, not by the government. Here are typical ranges:

💰 Calculate your exact EMI using our Mudra Loan Interest Rate and EMI Guide.

Frequently Asked Questions

What is the difference between Shishu, Kishore, and Tarun loans?

The difference is the loan amount and target business stage. Shishu covers up to ₹50,000 for new businesses, Kishore covers ₹50,001–₹5 lakh for growing businesses, and Tarun covers ₹5–₹10 lakh for established businesses.

Can I directly apply for a Tarun loan without taking Shishu first?

Yes. There is no requirement to start with Shishu. If your business qualifies and you have the required documents and credit score, you can directly apply for Kishore or Tarun.

Is there any subsidy difference between the three types?

No. None of the three categories have a direct subsidy component. However, Shishu loans have zero processing fees and more relaxed eligibility, making them effectively more accessible.

Which Mudra loan type has the lowest interest rate?

Shishu loans generally have the lowest interest rates (10%–12% p.a.) because the loan amount is small and risk is lower for banks.

Can I take two different types of Mudra loans simultaneously?

You can only have one Mudra loan at a time. Repay or upgrade your existing loan before taking a new one in a different category.

Do women get any special benefit in any category?

Women entrepreneurs are given priority across all three categories. Some banks offer 0.25%–0.50% lower interest rates for women borrowers under PMMY.

I already have Udyam Registration. Does it help with Mudra loan approval?

Yes, significantly. Having Udyam registration proves your business is legitimate and registered with the government. It strengthens your application for all three categories. If you're also registered under Startup India, mention it in your application.