Pradhan Mantri Mudra Yojana (PMMY): How to Get a Mudra Loan up to ₹20 Lakh

A Mudra loan is a collateral-free business loan of up to ₹20 lakh under the Pradhan Mantri Mudra Yojana (PMMY), open to small non-farm businesses in manufacturing, trading and services. Mudra only refinances lenders and does not lend to individuals. You apply to a bank, small finance bank, microfinance institution or other registered finance company, either at a branch or online on the JanSamarth or Udyamimitra portal.

The loan comes in four bands. Shishu goes up to ₹50,000, Kishor up to ₹5 lakh, Tarun up to ₹10 lakh and Tarun Plus up to ₹20 lakh. Tarun Plus began on 24 October 2024 and is meant for borrowers who have already repaid a Tarun loan, so a first-time borrower should plan around ₹10 lakh at most. There is no subsidy, and interest rates are left to each lender.

Approval turns on three things: proof that the business or activity exists, an acceptable credit record, and a specific use for the money, such as a machine quotation.

What does the Pradhan Mantri Mudra Yojana cover in each loan band?

Each band changes what the lender asks for.

Pick the band from the quotation, not the largest figure available. The lists of business ideas under ₹10 lakh and under ₹25 lakh show what each band can realistically buy.

How do you apply for a Mudra loan online or at a branch?

The lender takes the final decision on every route.

1. Cost the purchase. List each machine, tool or stock item with a supplier quotation, because lenders ask for proof of why you need the amount.
2. Gather identity, address and business documents (listed in the next section).
3. Pick the route from the table. A bank that already sees your transactions is usually the quicker start.
4. Fill the form. Shishu has a one-page application, while Kishor and Tarun use a longer format. For Tarun and Tarun Plus, attach a short written proposal with costs and expected sales; the guide to the detailed project report shows what such a document holds.

Who is eligible for a Mudra loan, and why do applications get rejected?

Any Indian citizen with an income-generating plan in a non-farm activity can apply, as the Mudra FAQ describes it. Manufacturing, processing, trading, services and allied agriculture (included from 1 April 2016, per Bank of Baroda) qualify, for individuals, firms and companies with a credit need within ₹20 lakh.

Rejections usually trace back to a short list of causes:

• Farm activity: growing crops is outside the scheme, while allied agricultural activity is covered.
• Past default: Bank of Maharashtra wants no default to any lender and a satisfactory credit record. Bank of Baroda applies a minimum bureau score.
• Personal use: Bank of Maharashtra states that the loan is not for consumption or personal needs.
• Tarun Plus without a repaid Tarun loan: the upper band is closed to first-time borrowers.
• No proof of need: no quotation or vendor details.

The score cut-off differs by bank, so a refusal at one lender does not close the door at another.

Which documents do banks ask for in a Mudra loan application?

Lenders set the exact list. This one follows Bank of Baroda's published requirements.

The Mudra FAQ says income tax returns are not insisted on for small-value loans, but expect statements and repayment checks from ₹5 lakh upward.

What interest rate and EMI should you expect on a ₹10 lakh Mudra loan?

The scheme leaves the rate to the lender, so the same ₹10 lakh costs different amounts at different banks.

Own margin is your share of the cost. "Collateral-free" does not mean 100% financed. On a ₹8 lakh machine, a 20% margin means ₹1.6 lakh from your pocket.

Rates have just turned upward. On 7 October 2026 the RBI raised the repo rate from 5.25% to 5.50%. A floating rate tied to the repo rate typically rises at the lender's next reset, so ask whether your quote is fixed or floating.

The EMI table below is calculated for ₹10 lakh over 7 years on a reducing balance, before fees.

Is there any subsidy on a Mudra loan?

No. The Mudra FAQ states that the scheme carries no subsidy, although a loan tied to a government scheme that gives a capital subsidy can still be sanctioned under Mudra. PMEGP is the usual subsidy-linked route for a new factory, with its own rates by area and category. Names that sound alike, such as PM Vishwakarma for artisans, are separate loans with separate eligibility. The page on the PM Vishwakarma Yojana covers the first, and the government schemes hub lists the rest.

What should you do before you walk into the bank?

Four steps save the most time:

1. Collect a supplier quotation for every machine or stock item in the request.
2. Check your credit report for errors, since banks apply a minimum bureau score before they study the plan.
3. Ask each lender the same four questions: is the rate fixed or floating, what is the processing fee, what guarantee fee applies, and how much margin must you bring.

If the Mudra ceiling falls short of your project cost, the guide to startup funding options lists other sources. If you are starting smaller, the low-investment business ideas show what a Shishu or Kishor loan can set up.

Frequently asked questions about the Mudra loan

Can I get a ₹50,000 Mudra loan online?

Yes. A ₹50,000 request falls in Shishu, and you can apply on the JanSamarth or Udyamimitra portal or at a branch. The Mudra FAQ puts normal processing at 7 to 10 days once your information is complete. A search for a "PM Modi ₹50,000 loan" can also point to PM SVANidhi, a separate scheme for street vendors.

Can I get a ₹20,000 loan without income proof?

Often for Shishu, but not automatically. The Mudra FAQ says income tax returns are not insisted on for small-value loans, so the lender relies on your identity, address and proof that the activity exists. A weak credit record can still lead to a refusal.

Can I use a Mudra loan to buy a taxi or tempo?

Yes, for commercial use. The Mudra FAQ says loans are available for a CNG tempo or taxi bought for commercial use, and khadi activity is eligible.

Can I repay a Mudra loan early?

Bank of Baroda lists pre-closure charges as nil on its Mudra page. Other lenders set their own terms, so ask for the foreclosure charge in writing before you sign.