A practical guide to the Pradhan Mantri MUDRA Yojana — the Shishu, Kishore, Tarun and Tarun Plus loan categories, eligibility, documents and how to apply for a collateral-free small business loan.
For a small trader, a home-based manufacturer or a first-time entrepreneur, the biggest hurdle is often access to affordable credit without pledging property. The Pradhan Mantri MUDRA Yojana (PMMY) was launched in April 2015 to solve exactly this problem, offering collateral-free loans of up to ₹20 lakh to non-farm micro and small enterprises.
MUDRA stands for Micro Units Development and Refinance Agency. Under PMMY, loans are provided through banks, non-banking financial companies (NBFCs) and micro-finance institutions (MFIs) to income-generating micro-enterprises in manufacturing, trading and services, including allied agricultural activities.
The defining feature is that these loans are collateral-free — you do not have to mortgage your house or provide a third-party guarantee. See the structured summary on our MUDRA loan scheme page.
MUDRA loans are organised by the size and stage of the business:
| Category | Loan amount | Typical stage |
|---|---|---|
| Shishu | Up to ₹50,000 | New or very early-stage business |
| Kishore | ₹50,000 – ₹5 lakh | Growing business needing expansion |
| Tarun | ₹5 lakh – ₹10 lakh | Established business scaling up |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Proven borrowers with a good repayment record |
A new entrepreneur usually starts with a Shishu loan and graduates to higher categories as the business grows and builds a repayment track record.
There is no rigid minimum-income or education requirement, which makes the scheme accessible to a very wide range of first-time entrepreneurs.
A MUDRA card, which works like a credit card for the business, can be issued for the working-capital portion so you can draw funds as needed.
Because the government does not directly give the loan — banks do — the strength of your business plan and repayment ability matters most.
If your needs go beyond ₹20 lakh, or you belong to a priority group, explore complementary schemes. SC/ST and women entrepreneurs can consider Stand Up India for loans between ₹10 lakh and ₹1 crore, innovative ventures can register under Startup India, and traditional artisans can benefit from the PM Vishwakarma Yojana.
No. Mudra loans are collateral-free, so you do not need to pledge property or arrange a third-party guarantee for eligible amounts.
Under the Tarun Plus category, borrowers with a good repayment history can access loans up to ₹20 lakh.
Yes. The Shishu category (up to ₹50,000) is specifically designed for new and very early-stage businesses.
Public and private sector banks, regional rural banks, NBFCs and micro-finance institutions all offer Mudra loans under PMMY.
The Mudra Yojana has helped fund crores of small enterprises that keep India's grassroots economy running. If you have a workable idea and a clean credit record, a collateral-free Mudra loan can be the push your business needs. Start small, repay diligently, and graduate to larger categories. For official details, visit mudra.org.in.
Disclaimer: SchemeSphere is an independent informational platform and is not affiliated with any government body. Please verify all details on the official portal before applying.
Written by
SchemeSphere Editorial Team
The SchemeSphere editorial team researches and simplifies government schemes so every citizen can understand their rights and benefits. We link to official sources and update our guides as rules change.
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