MUDRA Yojana : India’s micro, small, and medium enterprises (MSMEs) have long struggled with access to easy and collateral-free credit. Recognizing this challenge, the Modi Government launched the Pradhan Mantri MUDRA Yojana (PMMY) to provide financial support to budding entrepreneurs and small business owners. In 2025, the scheme continues to act as a financial lifeline, offering up to ₹10 lakh in loans without the need for any guarantee or collateral.
What is MUDRA Yojana?
The Pradhan Mantri MUDRA Yojana was launched in April 2015 with the aim of supporting non-corporate, non-farm small/micro enterprises. Under this scheme, loans are provided by commercial banks, NBFCs, Small Finance Banks, and Micro Finance Institutions (MFIs). These loans fall under the category of MUDRA (Micro Units Development & Refinance Agency Ltd.) and are designed to fund small businesses, self-employed individuals, and micro-entrepreneurs.
Key Features of the MUDRA Loan
- Loans up to ₹10 lakh
- No collateral or guarantee required
- Simple and minimal documentation
- Offered through various financial institutions
- Categorized into three loan types: Shishu, Kishor, and Tarun
- Special focus on women entrepreneurs, SC/STs, and other underserved communities
- Interest rates vary based on the applicant’s profile and lending institution
Categories of MUDRA Loans
The MUDRA loan is divided into three major categories based on the stage and funding needs of the business:
| Loan Category | Loan Amount | Suitable For | Interest Rate (approx.) | Repayment Tenure |
|---|---|---|---|---|
| Shishu | Up to ₹50,000 | Startups and new businesses | 8% to 12% | Up to 5 years |
| Kishor | ₹50,001 to ₹5 lakh | Growing businesses needing additional funds | 10% to 14% | 3 to 5 years |
| Tarun | ₹5 lakh to ₹10 lakh | Established businesses aiming to expand | 11% to 16% | Up to 7 years |
Who Can Apply for a MUDRA Loan?
The MUDRA Yojana is open to a wide range of applicants. You are eligible to apply if you fall under any of the following categories:
- Small manufacturing units
- Shopkeepers and traders
- Artisans and handicraft businesses
- Service-based businesses like salons, repair shops, etc.
- Transport operators, including auto-rickshaw and taxi drivers
- Food vendors and hawkers
- Agriculture-related activities (non-farm sector)
Documents Required for MUDRA Loan Application
While the documentation is minimal, you do need to submit certain papers to avail the MUDRA loan:
| Document Type | Details Required |
|---|---|
| Identity Proof | Aadhaar Card, Voter ID, PAN Card |
| Address Proof | Electricity Bill, Rent Agreement, Aadhaar |
| Business Proof | Registration Certificate, License, etc. |
| Bank Statements | Last 6 months of bank activity |
| Quotation for Machinery/Assets | Required for purchasing business assets |
| Passport-size Photographs | 2-3 recent colored photos |
How to Apply for a MUDRA Loan in 2025?
The process for applying for a MUDRA loan is straightforward and available both online and offline:
Offline Application Process
- Visit your nearest bank or financial institution participating in the MUDRA scheme.
- Fill out the MUDRA loan application form.
- Submit all required documents along with the application.
- The bank will assess your application and may call for an interview or discussion.
- Once approved, the loan amount is disbursed directly to your bank account.
Online Application Process
You can also apply for a MUDRA loan through the official MUDRA portal or bank websites:
- Visit: https://www.mudra.org.in
- Click on “Apply Now”
- Choose the loan category (Shishu, Kishor, Tarun)
- Fill in personal, business, and financial details
- Upload scanned documents
- Submit the application and track status online
Benefits of the MUDRA Yojana
The MUDRA scheme brings a host of advantages for small businesses:
- No collateral required: Eliminates the biggest barrier for first-time entrepreneurs.
- Government support: Financial inclusion backed by the Indian government.
- Flexible loan categories: Tailored funding based on your business size and need.
- Wider reach: Available across rural, semi-urban, and urban locations.
- Credit history not mandatory: Ideal for new entrepreneurs with no prior credit score.
Comparative Table: MUDRA vs Traditional Loans
| Feature | MUDRA Loan | Traditional Business Loan |
|---|---|---|
| Collateral Requirement | Not required | Usually required |
| Loan Amount Range | ₹50,000 to ₹10 lakh | ₹1 lakh to ₹1 crore+ |
| Credit Score Requirement | Not mandatory | Mandatory |
| Processing Time | 7–10 working days | 15–30 working days |
| Government Subsidy/Support | Yes | No |
| Availability in Rural Areas | High | Moderate |
| Application Complexity | Simple | Complex and document-heavy |
Success Stories Under MUDRA Scheme
Many small entrepreneurs across India have transformed their lives using MUDRA loans. Here are a few examples:
- Sunita Devi (Bihar): Used a Shishu loan to start a tailoring shop, now employs 4 women.
- Ramesh Yadav (Uttar Pradesh): Bought a tempo through a Tarun loan, now owns a small fleet.
- Meena Kumari (Rajasthan): Set up a beauty salon with a Kishor loan, now trains local girls.
These stories highlight how even a small loan amount can lead to long-term financial stability and job creation.
Points to Keep in Mind Before Applying
- Prepare a basic business plan before applying.
- Ensure documents are updated and authentic.
- Compare interest rates and terms offered by different banks.
- Understand your repayment capability and select the loan amount accordingly.
- Keep track of your loan status and maintain communication with the bank.
FAQs About MUDRA Loan Scheme
1. Can I apply for a MUDRA loan without having a registered business?
Yes, even unregistered businesses like street vendors and small shopkeepers can apply. However, having a business plan or proof of activity helps.
2. Is there any subsidy offered under the MUDRA loan scheme?
There is no direct subsidy, but the interest rates are generally lower and the government provides refinancing support to banks.
3. Can I apply for another MUDRA loan if I have already taken one?
Yes, if your previous loan has been repaid successfully, you can apply for a higher category loan.
4. How long does it take to get a MUDRA loan approved?
Typically, it takes about 7 to 10 working days depending on the bank and completeness of your documents.
5. Is a credit score necessary for a MUDRA loan?
No, a credit score is not mandatory, especially for first-time borrowers under the Shishu category.
The Pradhan Mantri MUDRA Yojana continues to be a beacon of hope for India’s small business ecosystem. With its low entry barriers, no requirement for collateral, and focus on financial inclusion, it empowers millions of entrepreneurs to dream big and grow their ventures. If you are looking to start or expand a small business in 2025, the MUDRA loan scheme is a smart and accessible option.