Government loan schemes
Mudra Loan: Shishu, Kishore, Tarun and Tarun Plus Explained
Quick answer
A Mudra loan is a collateral-free business loan of up to ₹20 lakh under the Pradhan Mantri MUDRA Yojana (PMMY). It comes in four categories: Shishu (up to ₹50,000), Kishore (₹50,001 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh) and Tarun Plus (₹10 lakh to ₹20 lakh, only for borrowers who have repaid a Tarun loan). Banks, NBFCs and microfinance institutions give it.
On this page
- Mudra loan at a glance
- Shishu, Kishore, Tarun and Tarun Plus explained
- Who can apply for a Mudra loan
- What you can use a Mudra loan for
- Mudra loan interest rate, fees and EMI
- Collateral, guarantee and the MUDRA Card
- Documents required for a Mudra loan
- How to apply for a Mudra loan
- Why Mudra applications get rejected
- Mudra vs PMEGP vs CGTMSE
- Frequently asked questions
Mudra loan at a glance
- Scheme
- Pradhan Mantri MUDRA Yojana (PMMY), launched 8 April 2015
- Maximum loan
- ₹20 lakh (raised from ₹10 lakh in October 2024)
- Categories
- Shishu, Kishore, Tarun, Tarun Plus
- Collateral
- None, and no third-party guarantee
- Guarantee cover
- Credit Guarantee Fund for Micro Units (CGFMU), which protects the lender
- Interest rate
- Set by each lender; there is no single fixed Mudra rate
- Who lends
- Public and private banks, regional rural banks, small finance banks, cooperative banks, NBFCs and microfinance institutions
- Where to apply
- Any lender's branch or website, or the JanSamarth portal
- Scale
- Over 52 crore loans worth ₹32.61 lakh crore in its first 10 years; 68% of borrowers are women
Scheme details as of October 2026. Sources are listed at the end.
Shishu, Kishore, Tarun and Tarun Plus explained
The four categories are stages of a business's growth. You don't pick a category: the amount you need decides it. Ask for ₹3 lakh and your loan is Kishore; ask for ₹8 lakh and it is Tarun.
- Shishu up to ₹50K
- Kishore up to ₹5L
- Tarun up to ₹10L
- Tarun Plus up to ₹20L
Upper limit of each category. Tarun Plus opens only after a Tarun loan is fully repaid.
Shishu
Up to ₹50,000
- Best for: New or very small businesses taking their first formal loan
- Typical uses: A sewing machine, a food cart, tools, opening stock for a small shop
- What to expect: The simplest paperwork. Most banks waive the processing fee and usually don't ask for your own contribution (margin).
Kishore
₹50,001 to ₹5 lakh · also spelt Kishor
- Best for: Running businesses that want to grow
- Typical uses: More stock, a second machine, shop renovation, a vehicle used for the business
- What to expect: Bank statements, proof that the business exists, and quotations for anything you are buying
Tarun
₹5 lakh to ₹10 lakh
- Best for: Established micro and small businesses with bigger plans
- Typical uses: Machinery, a new outlet, larger working capital
- What to expect: A project report, income tax returns and financial statements, and a closer look at your repayment capacity
Tarun Plus
₹10 lakh to ₹20 lakh · added in 2024
- Who qualifies: Only borrowers who have taken and fully repaid an earlier Tarun loan
- Typical uses: A bigger step up: a new production line, larger premises, higher stock levels
- What to expect: Your Tarun repayment record, recent financials and a detailed project report. CGFMU guarantee cover extends to these loans.
Who can apply for a Mudra loan
Mudra loans are for non-corporate, non-farm micro and small enterprises: individuals, proprietorships and partnership firms that earn income from:
- Manufacturing or processing
- Trading (shops, wholesale, distribution)
- Services (salons, repair shops, tailoring, transport, food services)
- Activities allied to agriculture, such as dairy, poultry, fisheries and beekeeping
You should also:
- Not be a defaulter with any bank or lender
- Have a clean credit record: lenders check your CIBIL report
- Have the skills or experience the business needs, if it is new
Businesses that commonly use Mudra loans
- Kirana store
- Tailoring unit
- Beauty parlour
- Mobile repair
- Tiffin service
- Bakery
- Auto or e-rickshaw
- Printing shop
- Pickle and papad unit
- Dairy
- Furniture workshop
- Medical shop
What you can use a Mudra loan for
- Term loan: machinery, equipment, shop fit-out, or a vehicle used in the business
- Working capital: stock and raw material, through an overdraft or cash credit limit, often on a MUDRA Card
- Composite loan: both together, for example a machine plus the raw material to run it
Mudra loan interest rate, fees and EMI
There is no single government-fixed interest rate for Mudra loans. Each lender sets its own under RBI rules, often linked to its external benchmark lending rate (EBLR), so your rate depends on the lender, the amount, the tenure and your credit record. Compare at least two lenders, starting with the bank where you already have your current account. Each bank's current benchmark is in our Mudra loan interest rates comparison.
- Processing fee: each lender sets its own; most banks waive it for Shishu loans.
- Tenure: set by the lender to match the asset's life and your cash flow. Term loans often run 3 to 5 years, sometimes with a short moratorium.
- Key Fact Statement: ask for it before you sign. It shows the all-in annual cost of the loan, including fees.
If a lender quotes a "flat" rate, convert it before comparing: our flat vs reducing interest calculator shows the real cost.
Example EMIs (illustrative)
| Category | Loan | EMI | Interest |
|---|---|---|---|
| Shishu | ₹50,000 | ₹1,613 | ₹8,081 |
| Kishore | ₹3,00,000 | ₹6,374 | ₹82,447 |
| Tarun | ₹8,00,000 | ₹16,998 | ₹2,19,858 |
| Tarun Plus | ₹15,00,000 | ₹31,871 | ₹4,12,234 |
Shishu over 3 years, the others over 5 years. Interest is the total paid over the loan, at an assumed 10% a year on a reducing balance, for illustration only. Your lender's rate will differ.
Collateral, guarantee and the MUDRA Card
Mudra loans need no collateral and no third-party guarantor. The lender does take a charge on what you buy with the loan, such as the machine or the stock.
The loans are covered by the Credit Guarantee Fund for Micro Units (CGFMU). That guarantee protects the lender, not you: you still owe the full amount, and missed EMIs go on your credit report.
What is a MUDRA Card?
A MUDRA Card is a RuPay debit card linked to your working-capital limit. You can withdraw cash at ATMs or business correspondent points and pay at shops. Interest is charged only on what you use, so depositing spare cash whenever you can keeps the cost down.
Documents required for a Mudra loan
Lenders' lists differ slightly; this is what most ask for.
All categories
- Aadhaar and PAN of the applicant (and partners, for a firm)
- Address proof and recent passport-size photographs
- Proof of business: Udyam registration, GST registration if you have one, shop or trade licence
- Business address proof: rent agreement, electricity bill or property document
- Bank statements for the last 6 to 12 months
- Quotations for machinery, equipment or stock you plan to buy
- Caste or minority certificate, if you are claiming a lender's concession
Also for Kishore, Tarun and Tarun Plus
- Project report or business plan with projected sales and costs
- Income tax returns and financial statements for the last 2 years (existing businesses)
- Sanction letter and repayment record of your earlier Tarun loan (Tarun Plus only)
How to apply for a Mudra loan
You can apply online or at a branch. Applying is free on every official channel.
- Work out how much you need. Price everything you will buy and add a few months of working capital. That amount sets your category.
- Prepare your documents and plan. Gather KYC, business proof and bank statements. For loans above ₹5 lakh, have a project report ready.
- Choose a lender. Your existing bank usually moves fastest because it already knows your account. A branch near your business is the next best.
- Apply. Use the lender's website or app, the government JanSamarth portal, or the branch with the PMMY application form.
- Appraisal and visit. The lender checks your credit report and documents, and may visit your shop or unit.
- Sanction and disbursal. Read the sanction letter and Key Fact Statement, sign, and the money is released to you or straight to your supplier.
Every screen of the online application is walked through in how to apply for a Mudra loan online.
Why Mudra applications get rejected
- Weak credit record: past defaults or many missed EMIs. Check your CIBIL report and get errors corrected before you apply.
- Amount too big for the business: asking for ₹10 lakh on ₹15,000 of monthly sales. Ask for what your cash flow can repay.
- No proof the business exists: get Udyam registration and keep business money in a business bank account.
- Vague plan: a clear one-page plan with quotations and expected sales makes the decision easy.
- Personal use: loans for non-business purposes are turned down.
- Wrong branch: branches usually lend within their service area, so apply near your business.
Mudra vs PMEGP vs CGTMSE
| Scheme | Best for | Key feature |
|---|---|---|
| Mudra | Micro businesses needing up to ₹20 lakh | Collateral-free, simple, any lender |
| PMEGP | New units in manufacturing or services | Government capital subsidy on the project cost |
| CGTMSE | Micro and small businesses needing more than ₹20 lakh | Larger collateral-free loans backed by a credit guarantee |
Not sure which Mudra category fits you?
Tell us what your business needs and a Kredway loan advisor calls you back to talk through the category, the documents and which lenders to approach. We advise; we don't lend.
Frequently asked questions
Is a Mudra loan interest-free?
No. You pay interest at the rate your lender sets. What Mudra removes is the need for collateral or a guarantor.
Can I get a Mudra loan for a new business?
Yes. New businesses commonly start with a Shishu or Kishore loan. You will need a clear business plan, quotations and, for larger amounts, a project report.
Can I apply for Tarun Plus directly?
No. Tarun Plus (₹10 lakh to ₹20 lakh) is only for borrowers who have taken a Tarun loan and repaid it in full.
Is there a subsidy on Mudra loans?
There is no capital subsidy under Mudra. If you are setting up a new unit and want a subsidy, look at PMEGP.
Do I need a good CIBIL score?
There is no published minimum, but lenders check your credit record and turn down applicants with defaults. A clean repayment history improves your chances and your rate.
How long does a Mudra loan take?
It varies by lender and amount. Small loans with complete documents can be sanctioned within days; Tarun and Tarun Plus loans take longer because of the appraisal.
Do women entrepreneurs get any concession?
Some lenders offer a lower rate or fee for women borrowers under Mudra. Ask your lender, as this is not the same everywhere.
What happens if I don't repay?
The lender can recover the dues and take the assets bought with the loan, and the default goes on your credit report. That makes future loans, including Tarun Plus, much harder to get.
Mudra loan kaise milta hai?
Pehle tay karein kitna loan chahiye: isi se category (Shishu, Kishore, Tarun ya Tarun Plus) tay hoti hai. Phir Aadhaar, PAN, business proof aur bank statement taiyaar karein, aur apne bank ki branch, website ya JanSamarth portal par apply karein. Apply karna free hai.
Mudra loan ke liye kaun se documents chahiye?
Aadhaar, PAN, address proof, photo, business proof (Udyam ya GST), 6 se 12 mahine ka bank statement aur machine ya stock ka quotation. ₹5 lakh se zyada ke loan ke liye project report aur ITR bhi lagte hain.