MUDRA Loan in 2025

How to Apply for MUDRA Loan in 2025 ?

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How to Apply for MUDRA Loan in 2025 ? – The Pradhan Mantri MUDRA Yojana (PMMY), launched by the Indian government on April 8, 2015, is designed to help small and micro businesses get easy access to loans. With the goal of “funding the unfunded,” it mainly supports startups, entrepreneurs, and small businesses in the non-corporate and non-farm sectors.

As of 2025, MUDRA loans remain a key driver of small business growth and job creation, now offering loans of up to ₹20 lakh for eligible applicants. This article gives you a simple overview of how to apply for a MUDRA loan in 2025, its main features, benefits, the banks that offer it, and answers to frequently asked questions.

How to Apply for MUDRA Loan in 2025

Applying for a MUDRA loan is straightforward, with options to apply online or offline through various financial institutions. Below are the steps to follow:

Step 1: Assess Eligibility and Loan Requirements

  • Eligibility: Indian citizens aged 18–65 years with a viable business plan for non-farm income-generating activities (manufacturing, trading, services, or allied agricultural activities like poultry, beekeeping, or fisheries) are eligible. Applicants must not be defaulters with any financial institution and should have a satisfactory credit history.

  • Loan Categories: MUDRA loans are offered under three schemes based on the stage of business growth:

    • Shishu: Up to ₹50,000 for startups or micro-enterprises.

    • Kishore: ₹50,001 to ₹5 lakh for established businesses seeking expansion.

    • Tarun: ₹5,00,001 to ₹10 lakh for further growth.

    • Tarun Plus: ₹10,00,001 to ₹20 lakh (only for those who have successfully repaid Tarun category loans).

  • Determine Loan Purpose: Identify whether the loan is for working capital, purchasing equipment, or business expansion.

Step 2: Gather Required Documents

Applicants need to prepare the following documents:

  • Identity Proof: Aadhaar card, PAN card, voter ID, driving license, or passport.

  • Address Proof: Recent utility bills (electricity, telephone), Aadhaar card, voter ID, or bank statement (not older than 2 months).

  • Business Proof: Udyam Registration Certificate (URC), business license, GST registration, or other registration documents.

  • Financial Documents: Bank statements for the last 6 months, proof of business profits, or equipment quotations (if applicable).

  • Others: Passport-sized photographs, proof of SC/ST/OBC/minority status (if applicable), and a business plan outlining the purpose and expected outcomes.

For online applications, some banks (e.g., Indian Bank) may require a selfie at the business location and a valid URC linked to a mobile number matching bank records.

Step 3: Choose a Financial Institution

MUDRA loans are not disbursed directly by MUDRA but through partner institutions, including:

  • Public and private sector banks (e.g., State Bank of India, Bank of Baroda, Indian Bank).

  • Regional Rural Banks (RRBs).

  • Small Finance Banks.

  • Non-Banking Financial Companies (NBFCs).

  • Micro Finance Institutions (MFIs).

  • Cooperative Banks.

You can approach a nearby branch or apply online via the Udyamimitra portal (www.udyamimitra.in) or the JanSamarth portal (www.jansamarth.in). The Udyamimitra portal allows applications to be viewed by multiple lenders simultaneously, increasing approval chances.

Step 4: Fill Out the Application Form

  • Offline Application:

    1. Visit a participating financial institution.

    2. Download the relevant MUDRA loan application form from the PMMY Kit (available on the MUDRA website or bank’s website). Shishu requires a one-page form, while Kishore and Tarun require a three-page form.

    3. Fill in personal and business details, including name, address, loan amount, and purpose.

    4. Submit the form with all required documents to the branch.

  • Online Application:

    1. Register on the Udyamimitra or JanSamarth portal with your name, email, mobile number, and business details.

    2. Upload the required documents and submit the application.

    3. Some banks, like SBI and Bank of Baroda, offer e-MUDRA loan applications through their websites for amounts up to ₹50,000.

Step 5: Loan Processing and Disbursement

  • The financial institution evaluates the application based on creditworthiness, business viability, and repayment capacity.

  • Shishu loans (up to ₹50,000) are typically processed within 7–10 days, while Kishore and Tarun loans may take longer, depending on the lender.

  • Once approved, the loan is disbursed to the applicant’s bank account. A MUDRA RuPay debit card may be issued for cash withdrawals or purchases to meet business needs.

Note: There are no agents or middlemen engaged by MUDRA. Beware of fraudulent facilitators claiming to assist with applications.

MUDRA Loan Features

MUDRA loans are designed to cater to the diverse needs of micro-enterprises. Key features include:

  • Loan Amount: No minimum limit; maximum up to ₹10 lakh for Shishu, Kishore, and Tarun schemes, and up to ₹20 lakh for Tarun Plus (for borrowers who have repaid Tarun loans).

  • Collateral-Free: No security or guarantor is required, as loans are covered under the Credit Guarantee Fund for Micro Units (CGFMU) by the National Credit Guarantee Trustee Company (NCGTC).

  • Loan Types: Available as term loans, working capital loans, or overdraft facilities.

  • Repayment Tenure: Up to 5 years for Shishu loans and 3–7 years for Kishore and Tarun loans, with a moratorium period (up to 6 months) based on income generation.

  • Interest Rates: Vary by lender, starting from 7.30% p.a. to 18% p.a., depending on the applicant’s credit profile and business risk. Women entrepreneurs may receive a 0.25% interest rate concession.

  • Processing Fees: Nil to nominal, often waived for Shishu loans.

  • MUDRA Card: A RuPay debit card linked to the loan account for flexible withdrawals and purchases, with a daily withdrawal limit (e.g., 10% of the loan balance for women entrepreneurs).

Benefits of MUDRA Loans

The MUDRA loan scheme offers numerous advantages, making it an attractive option for small businesses:

  • Accessibility: Collateral-free loans make financing accessible to small entrepreneurs without assets.

  • Affordability: Competitive interest rates and low or no processing fees reduce the cost of borrowing.

  • Flexibility: Funds can be used for various purposes, including working capital, equipment purchase, or business expansion.

  • Inclusivity: Targets marginalized groups, including women, SC/ST, OBC, and rural/urban poor, with special concessions for women entrepreneurs.

  • Employment Generation: Supports income-generating activities, fostering entrepreneurship and job creation.

  • Digital Convenience: Online application through Udyamimitra or bank portals simplifies the process.

  • COVID-19 Relief: A 2% interest subsidy is available for Shishu loan holders making timely payments under the Atmanirbhar Bharat Abhiyaan.

Indian Banks Supporting MUDRA Loans

As of 2025, 178 financial institutions, including public and private sector banks, RRBs, cooperative banks, NBFCs, and MFIs, disburse MUDRA loans. Here are some prominent banks offering MUDRA loans:

  • State Bank of India (SBI): Offers e-MUDRA loans up to ₹50,000 online and supports all categories.

  • Bank of Baroda: Provides Digital MUDRA Loans up to ₹50,000 with instant sanction and disbursement.

  • Indian Bank: Offers Online Shishu MUDRA Loan with end-to-end digital processing for pre-selected customers.

  • Bank of India: Supports micro-enterprises and handloom schemes with loans up to ₹10 lakh.

  • Central Bank of India: Facilitates loans for small vendors and service providers, as seen in success stories like vegetable and fast-food vendors.

  • ICICI Bank: Provides collateral-free loans for manufacturing, trading, and services.

  • HDFC Bank: Supports micro-enterprises with loans up to ₹10 lakh.

  • Other Banks: Punjab National Bank, Union Bank of India, UCO Bank, Indian Overseas Bank, IDBI Bank, Karnataka Bank, and more.

Applicants can check with their preferred bank or visit the Udyamimitra portal to explore all participating institutions.

Frequently Asked Questions (FAQs)

1. Who is eligible for a MUDRA loan?
Any Indian citizen aged 18–65 with a business plan for non-farm income-generating activities (e.g., manufacturing, trading, services, or allied agriculture) and no default history with financial institutions is eligible.

2. What is the maximum loan amount under MUDRA?
The maximum loan amount is ₹10 lakh for Shishu, Kishore, and Tarun schemes, and ₹20 lakh for Tarun Plus (for those who have repaid Tarun loans).

3. Do I need collateral for a MUDRA loan?
No, MUDRA loans are collateral-free, covered under the CGFMU. However, assets created with the loan may need to be hypothecated to the lender.

4. What are the interest rates for MUDRA loans?
Interest rates vary by lender, ranging from 7.30% to 18% p.a., depending on the applicant’s credit profile and business risk. Women entrepreneurs may get a 0.25% concession.

5. Can I use a MUDRA loan to buy a vehicle?
Yes, if the vehicle (e.g., auto-rickshaw, taxi, or tractor) is used for commercial purposes. Private vehicles are not eligible.

6. How long does it take to process a MUDRA loan?
Shishu loans are typically processed within 7–10 days, while Kishore and Tarun loans may take longer, depending on the lender.

7. Do I need a bank account with the lending institution?
Not mandatory, but having an account (e.g., savings or current account) with the lender may improve approval chances. For example, Indian Bank requires a savings or current account with regular transactions for over a year for its Online Shishu MUDRA Loan.

8. Is a credit score required for a MUDRA loan?
Generally, banks do not check credit scores for MUDRA loans, but a good credit history enhances approval chances.

9. Can women entrepreneurs get special benefits?
Yes, women entrepreneurs may receive a 0.25% interest rate reduction and access to the Mahila Uddyami Yojana for additional support.

10. How can I apply online for a MUDRA loan?
Register on the Udyamimitra portal (www.udyamimitra.in) or JanSamarth portal (www.jansamarth.in), fill in your details, upload documents, and submit the application. Alternatively, use bank-specific portals like SBI’s e-MUDRA or Bank of Baroda’s website.

Website – https://bankofindia.co.in/govt-schemes/pradhan-mantri-mudra-yojana

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