PM Mudra Yojana – Business Loans Up to ₹20 Lakh Without Collateral

Pradhan Mantri MUDRA Yojana (PMMY) provides collateral-free loans up to ₹20 lakh to micro and small enterprises for income-generating activities. MUDRA (Micro Units Development & Refinance Agency) supports small entrepreneurs, traders, and service providers who need credit to start or expand their businesses but lack access to formal banking.

What is PM Mudra Yojana?

PMMY offers loans through banks, NBFCs, and MFIs in three categories based on the stage of business:

Key Features

• No collateral required for any category
• No processing fee for Shishu loans
• Available through all commercial banks, RRBs, cooperative banks, NBFCs, and MFIs
• MUDRA Card — a debit card-like facility for working capital withdrawal
• Loans for manufacturing, trading, services, and allied activities

Who is Eligible?

• Any Indian citizen starting or running a micro/small business
• Non-farm income-generating activities — manufacturing, trading, services
• Small and micro enterprises with credit needs up to ₹20 lakh
• Individual entrepreneurs, proprietorships, partnerships
• Women entrepreneurs — special focus under Shishu category
• Existing businesses seeking expansion or working capital

Business Types Covered

• Small manufacturing units — food processing, textile, handicrafts
• Shopkeepers and traders
• Service providers — salons, repair shops, tailoring
• Fruit and vegetable vendors
• Transport — auto-rickshaw, taxi, goods transport
• Food stalls and restaurants
• Artisans and craftsmen

Not Eligible

• Agriculture and farm activities (covered under KCC)
• Corporate entities
• Businesses with existing credit facility above ₹20 lakh

Documents Required

For Shishu Loans (Up to ₹50,000)

• Aadhaar card
• PAN card (may be waived for small amounts)
• Passport-size photographs (2)
• Business address proof
• Bank account details
• Identity proof of business — Udyam registration, shop licence, etc.

For Kishore and Tarun Loans

• All Shishu documents, plus:
• Business plan/project report (for Tarun)
• Last 2 years' ITR (if applicable)
• Business vintage proof — registration, licence, utility bills
• Bank statements (last 6-12 months)
• Quotations for machinery/equipment (if for asset purchase)
• Udyam Registration Certificate (recommended)

How to Apply for MUDRA Loan

Online Application (via Mudra Portal)

1. Visit mudra.org.in
2. Navigate to "How to Apply" section
3. You will be redirected to participating bank portals
4. Select your preferred bank and apply through their online portal
5. Fill in personal and business details
6. Upload required documents
7. Submit the application
8. Bank reviews and processes within 7-10 working days

Direct Bank Application

1. Visit your nearest bank branch (any commercial bank, RRB, or cooperative bank)
2. Request the MUDRA loan application form (specify Shishu/Kishore/Tarun)
3. Fill in details — personal information, business details, loan amount needed
4. Attach required documents
5. Submit at the bank counter
6. Bank officer may visit your business premises for verification
7. Loan sanctioned and disbursed within 7-14 working days

Through Udyamimitra Portal

1. Visit udyamimitra.in
2. Register and submit your loan application online
3. The portal connects you with multiple lending institutions
4. Receive loan offers from interested lenders
5. Select the best offer and proceed

Interest Rate and Charges

MUDRA Card

• A RuPay debit card linked to your MUDRA loan account
• Used for working capital withdrawal — up to 20% of loan amount
• Can be used at ATMs and POS machines
• Helps manage day-to-day business expenses flexibly

Key Benefits

• No collateral — loans up to ₹20 lakh without any security or guarantee
• Low interest rates — competitive rates for micro/small enterprises
• No processing fee for Shishu loans
• Quick disbursement — typically within 7-14 working days
• Available at all banks — wide network of lending institutions
• Women-friendly — special focus on women entrepreneurs
• MUDRA Card for flexible working capital management
• Builds credit history — timely repayment helps access larger loans in future

Important Tips

1. Start with Shishu if you're a new entrepreneur — it's easier to get approved and has no processing fee
2. Prepare a simple business plan for Kishore and Tarun applications — banks need to see viability
3. Get Udyam Registration for your business — it strengthens your application and provides additional government benefits
4. Compare interest rates across banks before applying — rates vary significantly
5. Repay on time — good repayment history helps you graduate from Shishu to Kishore to Tarun and access larger credit

Frequently Asked Questions

Is collateral required for MUDRA loans?

No. MUDRA loans of up to ₹20 lakh are completely collateral-free. Banks cannot ask for any security or guarantee.

What is the interest rate on MUDRA loans?

Interest rates range from 7.3% to 12% per annum depending on the bank, loan category, and borrower's profile. Shishu loans typically have lower rates.

Can I get a MUDRA loan to start a new business?

Yes. Shishu loans (up to ₹50,000) are specifically designed for new and early-stage businesses. You need a basic business idea and identity documents.

Which banks provide MUDRA loans?

All scheduled commercial banks, Regional Rural Banks, cooperative banks, NBFCs, and MFIs participating in PMMY provide MUDRA loans. This includes SBI, PNB, BOB, HDFC, ICICI, and others.

What is the MUDRA Card?

It is a RuPay debit card linked to your loan account that allows you to withdraw working capital (up to 20% of loan) from ATMs and use it for business expenses.

Can women entrepreneurs get MUDRA loans?

Yes. Women entrepreneurs have priority under PMMY, especially for Shishu loans. Over 70% of Shishu loans have been disbursed to women borrowers.

This guide is for informational purposes only and is not affiliated with the Government of India. For official details, visit mudra.org.in or contact your nearest bank branch.