Mudra Loan in 2026: Limits, Interest Rates, Eligibility and How to Apply

A Mudra loan is the simplest way for a small, non-farm business in India to get a collateral-free bank loan — from a few thousand rupees for a vegetable cart to ₹20 lakh for a growing workshop. This guide explains what Pradhan Mantri Mudra Yojana (PMMY) actually is, the four loan categories including Tarun Plus, who is eligible, what interest you'll really pay, the documents banks ask for, and how to apply at a branch or online through JanSamarth — with EMI examples in rupees, verified as of October 2026.

Quick answer

A Mudra loan is any collateral-free business loan up to ₹20 lakh given by a bank, NBFC or MFI under PMMY for manufacturing, trading, services or allied farm activities. There's no subsidy and no fixed rate — the lender sets interest, usually about 9.5–12% at public sector banks.

• Shishu up to ₹50,000; Kishore up to ₹5 lakh; Tarun up to ₹10 lakh

• Tarun Plus up to ₹20 lakh — only after repaying a Tarun loan (since 24 October 2024)

• No collateral: loans are guaranteed under CGFMU

• Apply at any bank branch or online on JanSamarth — it's free

What is a Mudra loan?

Pradhan Mantri MUDRA Yojana was launched on 8 April 2015 to "fund the unfunded" — shopkeepers, artisans, small manufacturers, food stalls, repair shops and transport operators who had no collateral and little credit history.

MUDRA Ltd (Micro Units Development & Refinance Agency, a SIDBI subsidiary) does not lend to you directly. It refinances the institutions that do. Your loan comes from a Member Lending Institution: a public or private sector bank, foreign bank, regional rural bank, small finance bank, NBFC or microfinance institution. Any loan up to ₹20 lakh for a non-farm income-generating activity that such a lender gives is tagged as a PMMY loan.

By 27 March 2026, more than 57 crore Mudra loans worth about ₹40 lakh crore had been given, and in FY 2024-25 almost 60% of loan accounts belonged to women.

Mudra loan categories: Shishu, Kishore, Tarun and Tarun Plus

The four Mudra loan categories (2026)

Category	Loan amount	Typically for
Shishu	Up to ₹50,000	Starting out — a cart, a sewing machine, first stock for a small shop
Kishore	Above ₹50,000 up to ₹5 lakh	Stabilising or expanding — more stock, equipment, working capital
Tarun	Above ₹5 lakh up to ₹10 lakh	Scaling up — machinery, a bigger outlet, a goods vehicle
Tarun Plus	Above ₹10 lakh up to ₹20 lakh	Only borrowers who took and fully repaid a Tarun loan

Shishu

Loan amount

Up to ₹50,000

Typically for

Starting out — a cart, a sewing machine, first stock for a small shop

Kishore

Loan amount

Above ₹50,000 up to ₹5 lakh

Typically for

Stabilising or expanding — more stock, equipment, working capital

Tarun

Loan amount

Above ₹5 lakh up to ₹10 lakh

Typically for

Scaling up — machinery, a bigger outlet, a goods vehicle

Tarun Plus

Loan amount

Above ₹10 lakh up to ₹20 lakh

Typically for

Only borrowers who took and fully repaid a Tarun loan

Tarun Plus is the newest category. The Finance Minister announced it in the Union Budget on 23 July 2024 and it took effect on 24 October 2024, doubling the PMMY ceiling from ₹10 lakh. It's designed as a reward for a clean track record: if you haven't repaid a Tarun loan, you can't apply for Tarun Plus, no matter how big your turnover.

The category is decided by the amount sanctioned, not by how long you've been in business. A new bakery that needs ₹4 lakh for an oven and fit-out applies under Kishore.

Who is eligible for a Mudra loan?

According to MUDRA's FAQ, any Indian citizen with a business plan for a non-farm income-generating activity, whose credit need is up to ₹20 lakh, can approach a bank, MFI or NBFC. In practice that covers:

• Proprietorships, partnerships and other non-corporate micro and small businesses, new or existing, in rural or urban areas.
• Manufacturing, processing, trading and services — shops, salons, tailoring, repair shops, food processing, small factories, photocopy centres, tiffin services and so on.
• Commercial vehicles such as auto-rickshaws, e-rickshaws, three-wheelers and small goods carriers used for business.
• Allied farm activities — dairy, poultry, fisheries, beekeeping, agri-clinics, food and agro-processing. Pure crop cultivation is not covered.

Two practical conditions apply on top. First, the lender's normal credit checks still apply — a poor CIBIL history or an existing default will usually lead to rejection, and NCGTC's FAQ confirms lenders can turn down applications they find unviable. Second, if you already have a Mudra loan, your total outstanding Mudra borrowing across lenders can't exceed the ₹20 lakh ceiling.

Mudra loan interest rate in 2026

The government doesn't fix Mudra rates. MUDRA's FAQ says lending rates follow RBI guidelines, so each lender prices the loan off its own benchmark — usually the external benchmark lending rate (EBLR/RLLR) or MCLR — plus a spread for risk. SBI, for example, links PMMY pricing to its EBLR.

These are market ranges seen in 2026, not guaranteed quotes. Your rate depends on the lender, the amount, your credit score and the business. Two more costs to ask about:

• Processing fee — SBI charges nothing on Shishu and Kishore and 0.50% plus tax on Tarun; other lenders differ.
• Guarantee fee — the lender pays CGFMU an annual fee, at a standard 1% a year of the sanctioned amount in the first year. NCGTC allows lenders to recover it from the borrower, so ask whether it's added to your charges.

There's no interest subsidy under PMMY today. If you're an artisan in one of 18 traditional trades, PM Vishwakarma offers a loan at a fixed 5% instead.

Mudra loan EMI examples in ₹

Using a standard reducing-balance EMI:

• Shishu — ₹50,000 at 10% for 3 years: EMI about ₹1,613; total interest about ₹8,081.
• Kishore — ₹3,00,000 at 10.5% for 5 years: EMI about ₹6,448; total interest about ₹86,890. The same loan at 14% from an NBFC costs about ₹6,980 a month and ₹1,18,829 in interest — over ₹30,000 more.
• Tarun — ₹8,00,000 at 11% for 5 years: EMI about ₹17,394; total interest about ₹2,43,636.

A simple rule many bankers use: your EMI shouldn't take more than about half of the business's monthly surplus after costs. Try your own numbers below.

Mudra loan EMI — try a Kishore loan

Loan AmountInterest Rate (p.a.)Tenure

Loan Amount₹3,00,000.00

Total Interest₹86,890.21

Total Payable₹3,86,890.21

Number of EMIs60

Monthly EMI₹6,448.17

Open the full EMI Calculator (PDF, save, compare)

Tenure is set by the lender. SBI's PMMY terms, for example, allow up to 5 years (with up to 6 months' moratorium) for loans below ₹5 lakh, and up to 7 years (with up to 12 months' moratorium) from ₹5 lakh to ₹10 lakh.

How to apply for a Mudra loan

You have three routes, and all of them are free. Online-only "Mudra apps" that ask for an advance fee are not part of the scheme.

Mudra loan application, step by step

1. 1

   Work out the amount and the category

   List what you need — equipment quotes, stock, working capital — and the monthly sales you expect. The total decides whether it's Shishu, Kishore, Tarun or Tarun Plus.

   Tip: Ask for what the business can repay, not the maximum.

2. 2

   Choose a lender

   Your own bank is usually fastest because it already knows your account. Public sector banks and RRBs are generally cheaper; NBFCs and MFIs can be quicker for very small loans.

3. 3

   Apply online on JanSamarth (or at the branch)

   On jansamarth.in choose Business Activity Loan, log in with your mobile and Aadhaar OTP, answer the eligibility questions, fill the form, upload documents and select a lender. Or fill the bank's PMMY form at the branch.

   Open JanSamarth
4. 4

   Bank appraisal

   The branch checks your KYC, credit report, business proof and plan, and may visit the shop or unit.

5. 5

   Sanction, documents and disbursement

   If approved, you sign the loan agreement. Money goes to the supplier or your account; working-capital limits may come as a RuPay Mudra Card that works as an overdraft.

What about Udyamimitra? SIDBI's Udyamimitra portal was the earlier online route for Mudra applications. In October 2026 the government's own material points borrowers to JanSamarth, which it describes as covering PMMY alongside other credit-linked schemes and 200+ lenders. Use JanSamarth or your bank's website.

SBI e-Mudra and bank apps. Several banks offer a quick digital Mudra journey for existing account holders — SBI's e-Mudra is the best known. These are meant for small, Shishu-sized loans and the cap and terms are set by the bank, so check the current limit on the bank's own site before relying on it.

Documents required for a Mudra loan

MUDRA leaves the document list to each lender, within RBI's broad rules. This is what most banks ask for:

Mudra loan documents — typical bank list

0/9

• Identity proof: Aadhaar, PAN, voter ID or driving licence
• Address proof of home and business: utility bill, rent agreement or property papers
• Recent passport-size photographs
• Business proof: Udyam certificate, shop and establishment licence, GST registration or trade licence, if any
• Quotations for machinery, equipment or vehicle to be bought
• Bank statements for the last 6–12 months
• For Kishore and Tarun: a short project report or business plan, and ITR or simple accounts for existing businesses
• For Tarun Plus: proof that a previous Tarun loan was fully repaid
• SC/ST/OBC/minority certificate if the lender or a linked state scheme asks for it

Share Print

A free Udyam registration is one of the easiest ways to prove your business exists, and it takes Aadhaar and PAN only.

The CGFMU guarantee: why no collateral is needed

Mudra loans are collateral-free because the lender, not you, buys a guarantee from the Credit Guarantee Fund for Micro Units (CGFMU), managed by the National Credit Guarantee Trustee Company (NCGTC). If a covered loan goes bad, the fund repays a share of the lender's loss, after the lender absorbs a first-loss portion.

For you, this means three things. You shouldn't be asked to mortgage property or provide a third-party guarantee for a PMMY loan. The guarantee doesn't cancel your debt — a default still hits your credit score and the bank will pursue recovery. And the guarantee fee may show up as a charge on your loan, as NCGTC lets lenders recover it from borrowers.

Mistakes to avoid

• Falling for fake 'Mudra loan apply' apps and websites. Many look official. Real applications go through a lender, JanSamarth or a bank's own site, with no "approval fee".
• Borrowing for a non-business purpose. Mudra is for income-generating activity; using it for a wedding or a personal vehicle can make the loan recallable.
• Ignoring the all-in cost. Compare rate, processing fee and guarantee fee across two or three lenders.
• Skipping early EMIs. A clean Shishu or Kishore record is your ticket to a bigger Tarun — and Tarun is the only door to Tarun Plus.
• Taking a Mudra loan if you plan to join PM Vishwakarma soon. An outstanding Mudra loan blocks Vishwakarma registration until it's repaid.

Mudra loan vs PMEGP: which one?

Choose Mudra if you need money quickly, already run a business, or want working capital — there's no subsidy, but there's also no project-report approval chain. Choose PMEGP if you're setting up a new unit with machinery and can wait several months: you get a 15–35% subsidy on project cost up to ₹50 lakh. A Mudra-funded unit can later apply for PMEGP's second loan for upgradation.

Official Mudra loan links

• MUDRA Ltd — official site and FAQCategories, eligibility, no-subsidy rule
• JanSamarth portalApply online — Business Activity Loan
• PIB: Tarun Plus and ₹20 lakh limit (29 Oct 2024)
• PIB: 11 Years of PMMY (8 Apr 2026)
• NCGTC — CGFMU FAQGuarantee cover and fee

What to do next

Work out the EMI you can afford with the EMI calculator, check how big a loan your income supports in the loan eligibility calculator, and size your stock and credit needs in the working capital calculator. Then take your documents to your own bank or apply on JanSamarth. If you're starting a new manufacturing unit, read the PMEGP loan guide before deciding.

This is general information, not legal or financial advice — confirm on the official source or with your bank.

Frequently asked questions

What is the maximum Mudra loan amount in 2026?

The ceiling is ₹20 lakh under the Tarun Plus category, in force since 24 October 2024 after the Budget 2024-25 announcement. Tarun Plus is only for borrowers who have taken and fully repaid a Tarun loan. Everyone else can borrow up to ₹10 lakh across Shishu, Kishore and Tarun, depending on what the business needs and can repay.

What is the interest rate on a Mudra loan?

There is no single government rate. Each bank, NBFC or MFI prices Mudra loans under RBI rules, usually as its external benchmark or MCLR plus a spread. In 2026 public sector banks generally quote around 9.5% to 12% a year, while private banks and NBFCs often charge 12% to 16% or more. Ask for the rate in writing before you sign.

Is a Mudra loan given without collateral or guarantor?

Yes. Mudra loans up to ₹20 lakh are collateral-free. Lenders cover them instead under the Credit Guarantee Fund for Micro Units (CGFMU), run by NCGTC. The lender pays an annual guarantee fee — a standard 1% a year — and may pass it on to you, so check the charges sheet. Banks can still ask for a co-applicant in some cases.

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

Yes. New and existing non-farm micro businesses in manufacturing, trading, services and allied agriculture (dairy, poultry, fisheries, beekeeping and similar) are eligible. First-time borrowers usually start with a Shishu or Kishore loan; a simple project note with costs and expected monthly sales helps the bank decide.

Is there any subsidy on a Mudra loan?

No. MUDRA's own FAQ says PMMY loans carry no subsidy. If your project also qualifies for a government capital-subsidy scheme, the subsidy comes from that scheme. For a subsidy-linked loan for a new unit, look at PMEGP, which pays 15% to 35% of project cost.

Can I apply for a Mudra loan online?

Yes. Use the JanSamarth portal: choose Business Activity Loan, check eligibility, fill the form, upload documents and pick a lender. Many banks also take applications on their own websites or apps, and you can always walk into a branch. Mudra loans are free to apply for — never pay an agent or app for 'approval'.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Pradhan Mantri Mudra Yojana Loan Limit Raised to ₹20 Lakh from ₹10 Lakh — PIB (Ministry of Finance), 29 Oct 2024 · accessed 7 October 2026
2. 2.11 Years of Pradhan Mantri MUDRA Yojana — PIB (Ministry of Finance), 8 Apr 2026 · accessed 7 October 2026
3. 3.MUDRA — Frequently Asked Questions — MUDRA Ltd (SIDBI) · accessed 7 October 2026
4. 4.CGFMU — Frequently Asked Questions (updated 18 Feb 2025) — National Credit Guarantee Trustee Company (NCGTC) · accessed 7 October 2026
5. 5.PMMY — SME Government Schemes — State Bank of India · accessed 7 October 2026
6. 6.Latest Mudra loan interest rates 2026 — IIFL Finance (23 Apr 2026) · accessed 7 October 2026
7. 7.Tarun Plus (current affairs note) — InsightsIAS · accessed 7 October 2026