PM MUDRA Yojana — Loan Up to ₹20 Lakh for Small Business, How to Apply

What is PM MUDRA Yojana?

Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana is a Government of India scheme launched on 8th April 2015 to provide collateral-free loans up to ₹20 lakh to micro and small enterprises. MUDRA loans are available through banks, NBFCs, and microfinance institutions.

The scheme targets the non-corporate, non-farm small/micro enterprises that form the backbone of India's economy — small shopkeepers, vendors, artisans, small manufacturers, and service providers.

Key Fact: Over 40 crore MUDRA loans have been sanctioned since the scheme's launch, with more than 70% of loans going to women entrepreneurs.

Loan Categories

MUDRA loans are divided into three categories based on business stage and loan amount:

Who is Eligible?

• Any Indian citizen with a business plan for a non-farm income-generating activity
• Small/micro business owners — manufacturing, trading, services, allied agriculture
• New entrepreneurs starting a business (Shishu category)
• Existing small businesses seeking expansion capital
• Self-employed individuals — shopkeepers, vendors, truck operators, food service units, repair shops
• Women, SC/ST, OBC entrepreneurs (priority lending)

Not Eligible

• Large corporate entities
• Companies already availing loans from formal banking for the same purpose
• Purely agricultural activities (crop cultivation) — allied activities like dairy, poultry, beekeeping are covered

Documents Required

For Shishu Loans (up to ₹50,000)

• Aadhaar Card and PAN Card (PAN optional for loans under ₹50,000)
• Passport-size photographs (2)
• Bank account details
• Business address proof (utility bill, rent agreement)
• Identity proof (Voter ID, driving licence — any one)

For Kishore & Tarun Loans

• All Shishu documents, plus:
• Business plan/project report (describing the activity, projected income)
• PAN Card (mandatory)
• Last 2 years' ITR (if existing business)
• Last 6 months' bank statements
• Business registration (Udyam Registration, GST, Shop & Establishment licence — as applicable)
• Quotations for machinery/equipment (if purchasing assets)
• Category certificate (SC/ST/OBC, if claiming priority)

How to Apply — Step-by-Step

Online Application

Step 1: Visit Udyami Mitra Portal

Go to udyamimitra.in or psbloansin59minutes.com

Step 2: Register

• Create an account with your mobile number and email
• Verify via OTP

Step 3: Fill Loan Application

• Select "MUDRA Loan" as the product
• Choose the loan category (Shishu/Kishore/Tarun)
• Fill in personal details, business details, and loan amount required
• Upload documents (Aadhaar, PAN, business proof, etc.)
• Submit a brief business plan (especially for Kishore/Tarun)

Step 4: Bank Selection

• The portal matches you with nearby banks/NBFCs offering MUDRA loans
• Select your preferred lender
• The application is forwarded to the selected bank

Step 5: Bank Processing

• The bank reviews your application
• For Shishu loans, approval is often quick (1-2 weeks)
• For Kishore/Tarun, the bank may request an interview or site visit
• Upon approval, the loan is disbursed to your bank account

Through Bank Branch (Offline)

1. Visit any bank branch (PSU banks, private banks, regional rural banks)
2. Ask for a MUDRA loan application form
3. Submit the filled form with required documents
4. The branch manager evaluates and processes your application
5. Shishu loans are typically processed within 7-14 days

Through Microfinance Institutions (MFIs)

• For Shishu loans, many MFIs provide MUDRA loans in rural/semi-urban areas
• Group-based lending is common through MFIs
• Contact local MFIs or check the MUDRA portal for empanelled institutions

Interest Rates & Fees

Important: Interest rates vary between banks. Compare rates at multiple banks before finalizing. Women entrepreneurs and SC/ST applicants may get preferential rates.

Processing Time

• Shishu loans: 7-14 days
• Kishore loans: 2-4 weeks
• Tarun loans: 3-6 weeks
• Online (PSB in 59 minutes): In-principle approval within 59 minutes; disbursement in 7-14 days

MUDRA Card

After loan approval, you can request a MUDRA Card — a RuPay debit card linked to a working capital account. This allows you to:

• Withdraw working capital as needed (instead of lump sum)
• Manage cash flow efficiently
• Make purchases directly

Important Tips

1. Start with Shishu if you're new — smaller amounts are easier to get approved and help build your credit history for larger loans later.
2. Prepare a solid business plan for Kishore/Tarun — banks evaluate the viability of your business, not just your credentials.
3. Compare interest rates — different banks offer different rates. Use the Udyami Mitra portal to see multiple options.
4. Get Udyam Registration first — it's free at udyamregistration.gov.in and strengthens your application. See our Udyam Registration guide.
5. Repay on time — good repayment history qualifies you for higher loan amounts (Kishore → Tarun) and better interest rates.

Frequently Asked Questions (FAQs)

Q1: Do I need collateral or a guarantor for MUDRA loan?

No. MUDRA loans are collateral-free and guarantor-free. The risk is covered by the Credit Guarantee Fund for Micro Units (CGFMU).

Q2: Can I get a MUDRA loan for agriculture?

Not for crop cultivation. However, allied agricultural activities like dairy, poultry farming, beekeeping, fishery, food processing, and agro-service centres are eligible.

Q3: Can a salaried person apply for MUDRA loan?

No. MUDRA loans are for self-employed individuals and business owners only. You must have an existing or planned non-farm business activity.

Q4: What if my MUDRA loan application is rejected?

Ask the bank for the reason for rejection (they must provide it). Common reasons include poor credit score (CIBIL), incomplete documents, or unviable business plan. You can reapply after addressing the issues, or apply at a different bank.

Q5: Can I take a MUDRA loan from multiple banks?

No. You cannot take MUDRA loans from multiple banks simultaneously for the same purpose. However, you can have one MUDRA loan and other non-MUDRA loans.

Q6: Is there any subsidy on MUDRA loans?

No subsidy — MUDRA loans are regular loans that must be repaid with interest. The benefit is that they are collateral-free with competitive interest rates.

Q7: Can women get special benefits under MUDRA?

Yes. Women entrepreneurs get priority consideration for MUDRA loans. Some banks offer lower interest rates (0.25-0.50% less) for women borrowers.

This guide is for informational purposes only. CitizenNest is an independent platform and is not affiliated with the Government of India. Always verify details on the official MUDRA portal before applying.