PM Mudra Yojana — Business Loans for Small Entrepreneurs
What is PM Mudra Yojana?
Pradhan Mantri MUDRA Yojana (PMMY) provides collateral-free loans from ₹50,000 to ₹10 lakh to small businesses, micro enterprises, and self-employed individuals through banks, NBFCs, and microfinance institutions.
MUDRA stands for Micro Units Development & Refinance Agency.
Three Loan Categories
| Category | Loan Amount | For |
|---|---|---|
| **Shishu** | Up to ₹50,000 | Starting a new business |
| **Kishore** | ₹50,001 to ₹5 lakh | Established business needing growth capital |
| **Tarun** | ₹5 lakh to ₹10 lakh | Well-established business for expansion |
Who Can Apply?
- Individual entrepreneurs running a small business
- Proprietorship / Partnership firms
- Small manufacturers, traders, shopkeepers, street vendors
- Agricultural allied activities (not direct farming)
- Artisans and craftsmen
- Food processing units, repair shops, small factories
- Transport vehicles (taxis, auto-rickshaws) for commercial use
The business must be in the non-farm, non-corporate sector.
What Activities are Covered?
- Food processing (papad, pickle, bakery, catering)
- Textile and garment making
- Furniture and wood products
- Leather products
- Repair shops (vehicles, electronics, machinery)
- Salons and beauty parlours
- Small trading and retail shops
- Transport (autos, taxis, small trucks)
- Healthcare (clinics, pharmacies — small scale)
Interest Rate
There is no fixed interest rate set by the government. Each bank sets its own rate. Typically ranges from 8.5% to 12% per annum depending on the lender and your profile.
Tip: Compare rates from 2–3 banks before applying.
Documents Required
For All Categories:
- Aadhaar Card + PAN Card (or Form 60 if no PAN)
- Passport size photograph (2 copies)
- Proof of business address
- Proof of residence
- Bank statement (last 6 months)
- Quotations for machinery/equipment (if purchasing)
Additional for Kishore and Tarun:
- Business registration certificate (if applicable)
- Last 2 years' balance sheet or ITR
- Existing loan details (if any)
- GST registration (if applicable)
No collateral required for Mudra loans. However, for Tarun category, some banks may ask for collateral.
How to Apply
Option 1: Visit Your Bank Directly
- Go to any public sector bank (SBI, PNB, Bank of Baroda, Canara Bank, etc.)
- Ask for the Mudra Loan application form
- Submit with documents
- Bank will assess and sanction within 7–30 working days
Option 2: Apply Online
SBI e-Mudra: emudra.sbi.co.in — for loans up to ₹1 lakh, fully online Udyamimitra Portal: udyamimitra.in — connects you to multiple lenders
Option 3: Through NBFC / MFI
Microfinance Institutions (MFIs) are ideal for Shishu loans in rural and semi-urban areas. They process faster and visit you at your business location.
Mudra Card
Once sanctioned, you receive a Mudra Card — a RuPay debit card linked to a credit limit. You withdraw funds as needed (like a working capital overdraft), paying interest only on the amount used.
Subsidies Available with Mudra
Mudra loans can be combined with:
- PMEGP (Prime Minister's Employment Generation Programme) — up to 35% subsidy
- SC/ST/Women entrepreneur schemes — additional interest subsidy
- State government subsidies — varies by state
Tips for Faster Approval
- Have a simple business plan — 1 page describing what you will do with the loan
- Maintain a clean bank account — regular transactions, no cheque bounces
- Aadhaar and PAN linked to your bank account
- Apply through your existing bank — relationship improves chances
- Start with Shishu if you are new — easier to get, builds credit history
Helpline
Mudra Helpline: 1800-180-1111 / 1800-11-0001 (Toll Free) Website: mudra.org.in Udyami Mitra: udyamimitra.in