MUDRA Loan for Small Business: Complete Guide 2026
Pradhan Mantri MUDRA Yojana (PMMY) provides collateral-free loans from ₹50,000 to ₹10 lakh to micro and small enterprises through banks, MFIs, and NBFCs.
Key Benefits
₹10 Lakh
Maximum amount
Three categories: Shishu (up to ₹50K), Kishor (₹50K–₹5L), Tarun (₹5L–₹10L). Collateral-free. Interest rates vary by lender (typically 8–12% p.a.).
Eligibility Criteria
- Micro or small enterprise registered under Udyam (or informal businesses in many cases)
- Business activity: manufacturing, trading, services, or allied agriculture
- Non-farm income-generating activities only — excludes crop loans and pure agriculture
- No prior loan default — a clean credit history with banks improves approval chances
- No minimum turnover threshold — even very small businesses and self-employed individuals qualify
- Shishu category: business income/activity proof sufficient; Kishor/Tarun: 2-year ITR and bank statements required
Frequently Asked Questions
What is the interest rate on MUDRA loans?
MUDRA does not fix a uniform interest rate. Banks and NBFCs set their own rates, typically ranging from 8% to 12% per annum. MFIs may charge 20–26% for smaller Shishu loans. Compare across lenders before applying.
Is collateral required for MUDRA loans?
No — MUDRA loans are collateral-free. However, lenders may ask for a personal guarantee for Kishor and Tarun category loans. Shishu loans rarely require even a guarantor.
How long does MUDRA loan approval take?
With complete documents: 7–14 working days at most banks. Jan Samarth portal (jansamarth.in) can pre-screen and connect you to lenders digitally, reducing processing time significantly.
Can I apply for MUDRA online?
Yes. Apply via the Jan Samarth portal (jansamarth.in) for digital end-to-end processing. Alternatively, visit any scheduled commercial bank, NBFC, or MFI branch directly with your documents.
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