PM Mudra Loan
The short version
Pradhan Mantri Mudra Yojana is not a lender. It is a government scheme that lets banks, small finance banks, NBFCs and microfinance lenders give small businesses loans without asking for collateral, because a government fund guarantees those loans.
Loan
in four tiers
Collateral
government-guaranteed
For
small businesses
Rate
not set by the scheme
The ₹20 lakh Tarun Plus tier (since October 2024) is only for people who have taken and fully repaid a Tarun loan.
Step by step
How Mudra works
- 01
Make a simple plan
What the business does, what you need the money for, and how it will be repaid. Bigger tiers need more detail.
- 02
Apply to a lender
At a bank branch, a small finance bank, an NBFC or MFI, or online through the JanSamarth portal.
- 03
The lender decides
The lender checks your plan, repayment history and credit score, and sets the rate and tenure. Mudra does not approve loans itself.
- 04
Get funds or a Mudra card
Money for equipment is paid out as a loan. Working capital can come as a Mudra RuPay card you draw on as needed.
See it
Play with the numbers
Move the sliders and tap the chips. Everything recalculates as you go, using the scheme’s own rules.
Which Mudra loan fits what you need
Growing: more stock, a machine, a small shop.
Income-generating, non-farm work
Repaying ₹1,00,000
Mudra does not set the rate: each lender prices its own loans, so the same loan can cost more or less. Compare a few before you sign.
Key rules
The rules that matter
Who can borrow
manufacturing, trading, services
Farm-allied
dairy, poultry, fishery, beekeeping
Collateral
covered by CGFMU guarantee
Interest
compare a few
Processing fee
usually waived for Shishu
Not for
or crop farming, or personal use
Tax
How it’s taxed
A Mudra loan is a business loan, so the tax side is about your business, not the scheme.
Put in: Loan money is not income.
Grows: Interest paid on a business loan is usually a business expense.
Take out: You repay the principal from business income.
Is it for you
Who it suits
A good fit if
- You run or are starting a small non-farm business and need under ₹20 lakh.
- You have no property or gold to pledge.
- You want working capital you can draw as needed (Mudra card).
- You have a clear plan for how the business will repay.
Think twice if
- !The money is for personal use: Mudra is only for income-generating activity.
- !Your credit history has defaults: lenders can still refuse.
- !Someone offers to get you a Mudra loan for a fee: there are no agents, apply to the lender directly.
Avoid these
Common mistakes
Paying an agent
Mudra has no agents or middlemen. Anyone asking for a fee to “approve” a Mudra loan is not part of the scheme.
Asking for the wrong tier
Ask for what the plan needs. A Shishu loan is quicker, with fewer documents and usually no processing fee.
Not comparing lenders
The scheme sets no rate. Two banks can price the same Mudra loan quite differently.
Missing repayments
A Mudra loan is reported to credit bureaus like any loan. Late payment hurts your CIBIL score and rules out Tarun Plus later.
Compare
Mudra next to other ways to borrow
Mudra
How to apply
How to apply Mudra
- 1
Get your papers together
KYC, proof the business exists (Udyam registration, GST or shop licence), bank statements and a quote for what you’ll buy.
- 2
Apply
At the branch where you bank, or on jansamarth.in, choosing the Mudra / business activity loan option.
- 3
Appraisal and sanction
The lender reviews the plan and may visit. Once sanctioned you sign the loan papers and the money or Mudra card is issued.
Documents you’ll need
- Aadhaar and PAN
- Business proof (Udyam, GST or shop licence)
- Bank statement, about 6 months
- Quotation for machinery or stock
- For Kishore and Tarun: projected balance sheet and ITRs
You apply to a bank or other lender directly, or online on JanSamarth. Truely Money does not take applications.
FAQ
Questions people ask
What interest rate will I pay?
The lender sets it based on its own rates and your profile. Mudra does not fix a rate or give an interest subsidy, so compare offers from two or three lenders.
Do I need a guarantor or collateral?
No collateral or third-party guarantee is required. The loan is covered by the government’s Credit Guarantee Fund for Micro Units (CGFMU).
Can I get ₹20 lakh on my first loan?
No. The Tarun Plus tier (₹10–20 lakh) is only for borrowers who have taken a Tarun loan and repaid it in full. A first loan is up to ₹10 lakh.
Can farmers apply?
Not for crop farming. Farm-allied activities such as dairy, poultry, fisheries and beekeeping are covered.
Can I start a new business with Mudra?
Yes. Mudra loans are for new as well as existing businesses, but a new business needs a clearer plan.
What is a Mudra card?
A RuPay debit card linked to a working-capital limit, so you can draw and repay as your business needs, paying interest only on what you use.
Go further
Related tools and guides
Checked against official sources on 21 Oct 2026. Government rates and rules change, so confirm the latest on the official site before you act. This page explains how the scheme works and is not personal financial advice. Truely Money is independent, is not affiliated with Ministry of Finance or any government body, and does not take applications.