Mudra Loan 2026 — Shishu, Kishor, Tarun & Tarun Plus: Eligibility, Interest Rates & How to Apply Online
A complete guide to the Pradhan Mantri Mudra Yojana (PMMY): collateral-free business loans up to ₹20 lakh, the four loan categories, who qualifies, documents needed, 2026 interest rates, and step-by-step online application — with a built-in Mudra EMI calculator.
In short
A Mudra loan is a collateral-free business loan under the Pradhan Mantri Mudra Yojana (PMMY), available to non-corporate, non-farm micro enterprises. In 2026 it offers loans from ₹50,000 up to ₹20 lakh across four categories — Shishu, Kishor, Tarun and the newer Tarun Plus. There's no collateral and no government-fixed rate; banks, NBFCs and MFIs price it on their own MCLR plus a spread, typically around 10%–16% p.a. You can apply online via the Udyamimitra or JanSamarth portal, or at any bank branch.
What is a Mudra Loan?
Mudra stands for Micro Units Development & Refinance Agency. Launched on April 8, 2015, the Pradhan Mantri Mudra Yojana (PMMY) was built on a simple idea — "Fund the Unfunded" — to give India's smallest businesses access to formal credit without the usual barrier of collateral.
Importantly, MUDRA does not lend to you directly. It's a refinancing institution (a subsidiary of SIDBI). You take a Mudra loan from a participating lender — a public or private bank, Regional Rural Bank, Small Finance Bank, NBFC or Micro Finance Institution — and that loan is classified as a "Mudra loan" under PMMY.
The loan supports non-corporate, non-farm income-generating activities in manufacturing, trading, services and allied-agriculture (like dairy, poultry and beekeeping).
What is a Mudra loan?
A Mudra loan is a collateral-free business loan of up to ₹20 lakh under the Pradhan Mantri Mudra Yojana, given by banks, NBFCs and MFIs to micro and small non-farm enterprises in India.
Is a Mudra loan collateral-free?
Yes. Mudra loans require no collateral or third-party guarantee. Lenders are protected through the Credit Guarantee Fund for Micro Units (CGFMU), so the borrower pledges no property or assets.
Who gives Mudra loans?
MUDRA itself only refinances. The actual loan comes from commercial banks, Regional Rural Banks, Small Finance Banks, NBFCs and Micro Finance Institutions across India.
Mudra Loan Categories: Shishu, Kishor, Tarun & Tarun Plus
Mudra loans are split into four categories that mirror a business's growth stage. The fourth — Tarun Plus — was introduced in the Union Budget 2024-25 and is fully operational in 2026, doubling the ceiling from ₹10 lakh to ₹20 lakh.
| Category | Loan Amount | Best Suited For |
|---|---|---|
| Shishu | Up to ₹50,000 | Brand-new or very early-stage micro units |
| Kishor | ₹50,001 – ₹5 lakh | Established units needing to grow or buy stock/equipment |
| Tarun | ₹5 lakh – ₹10 lakh | Well-running businesses ready for bigger expansion |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Growth-stage units that have repaid a Tarun loan |
📌 Tarun Plus — the key 2026 update
Tarun Plus is not open to everyone. It's specifically for entrepreneurs who have already availed and successfully repaid a loan under the Tarun category. Think of it as a reward for a clean repayment track record — your ladder to the ₹20 lakh ceiling.
PMMY in 2026 — Latest Figures
The scheme completed 11 years on April 8, 2026. Some headline numbers that show its scale:
- ₹40.07 lakh crore sanctioned through 57.79 crore loans since launch in 2015.
- Over 12 crore loans went to first-time entrepreneurs — about 21% of all accounts.
- Women borrowers hold roughly 60% of loan accounts, reflecting the scheme's strong reach among women-led enterprises.
- SC, ST & OBC categories together account for about 45.5% of loan accounts.
- Top states by disbursement: Uttar Pradesh (~₹58,111 cr), Bihar (~₹54,064 cr) and Maharashtra (~₹50,762 cr).
- FY 2025-26 disbursement crossed ₹5.65 lakh crore (up to March 2026).
A 25 bps (0.25%) interest concession is often extended to women entrepreneurs through MFIs/NBFCs, and many banks offer their own small rate concessions for women borrowers.
Mudra Loan Eligibility
- Age: 18 to 65 years.
- Business type: Any non-farm, income-generating micro enterprise — manufacturing, trading, services or allied-agriculture.
- Entity: Sole proprietorships, partnerships, and other non-corporate small/micro units.
- Credit record: No history of loan default. A CIBIL score isn't mandatory for small Shishu loans, but matters for Kishor and Tarun.
- Repayment track: For Tarun Plus (above ₹10 lakh), you must have successfully repaid a previous Tarun loan.
- Udyam registration: Increasingly required by lenders for higher-value Tarun and Tarun Plus loans.
Quick eligibility checklist
- Indian citizen aged 18–65
- Non-farm income-generating business
- Clean repayment history
- Valid KYC — Aadhaar & PAN
What You Can Use a Mudra Loan For
✅ Eligible activities
- Shops, traders, vendors & service businesses
- Manufacturing & food/agro-processing units
- Textiles, handicrafts & artisan work
- Commercial transport (auto, e-rickshaw, small goods vehicle)
- Allied agriculture — dairy, poultry, fishery, beekeeping
- Working capital & term finance for the above
❌ Not covered
- Direct crop cultivation & farming
- Land improvement / irrigation for crops
- Corporate (large company) borrowers
- Personal, non-business expenses
Documents Required for a Mudra Loan
Identity & address
- Aadhaar card
- PAN card
- Voter ID / Passport / Driving Licence
- Passport-size photos
Business proof
- Udyam registration (recommended)
- Trade licence / shop establishment certificate
- Business address proof
Financial (Kishor / Tarun)
- Bank statements (6 months)
- ITR & financials, if available
- Quotations for machinery / a simple project plan
Shishu loans need minimal paperwork — often just a one-page application. Kishor and Tarun use a more detailed three-page format with financials.
Mudra Loan Interest Rates & Charges (2026)
There is no government-fixed Mudra rate. Each lender prices the loan on its own MCLR (Marginal Cost of Funds Based Lending Rate) plus a spread, based on RBI guidelines, your profile and the loan category. Indicative 2026 ranges:
| Category | Typical Interest Rate (p.a.) | Processing Fee |
|---|---|---|
| Shishu (up to ₹50K) | ~10% – 12% | Usually nil |
| Kishor (₹50K – ₹5L) | ~11% – 15% | ~0.50% |
| Tarun / Tarun Plus (₹5L – ₹20L) | ~12% – 16% | ~0.50% – 1% |
Public sector banks generally price lower than NBFCs/MFIs. For working-capital facilities, interest is charged only on the amount actually used (held overnight), not the full sanctioned limit. Repayment tenure typically runs from a few months up to 7 years, sometimes with a moratorium of up to 12 months.
The Mudra Card
A Mudra Card is a RuPay debit card linked to your working-capital loan account. Instead of drawing the whole loan at once, you withdraw funds as you need them and pay interest only on the amount used. It's a simple way to manage cash flow for recurring business expenses like raw material and stock.
Mudra Loan EMI Calculator
Estimate your monthly EMI, total interest and total repayment for a Mudra loan. Adjust the amount (up to the ₹20 lakh Tarun Plus ceiling), rate and tenure below.
Example: a ₹5 lakh Kishor loan at 12% for 5 years works out to roughly ₹11,122/month. This is an estimate — your actual EMI depends on the lender's exact rate and fees.
Related: EMI Calculator · Bank Loan Sanction Process
How to Apply for a Mudra Loan Online
In 2026, the fastest route is digital. You can apply through a single-window government portal, then complete the process at your chosen bank branch.
- Choose your category — decide whether you need Shishu, Kishor, Tarun or Tarun Plus based on the amount.
- Go to an official portal — apply on Udyamimitra or JanSamarth (both match you to lenders), or visit a bank/NBFC/MFI branch directly.
- Fill the application — enter business details, loan purpose and amount; upload KYC and business proof.
- Get in-principle approval — the portal routes your request to lenders; you receive a digital approval to take to the branch.
- Verification — the lender reviews documents, credit history (for Kishor/Tarun) and business viability.
- Sanction & disbursement — once approved, funds are credited to your business account; a Mudra Card may be issued for working capital.
🔗 Official Mudra & application portals
Common Rejection Reasons & Tips to Improve Approval
Why applications get rejected
- Mixing personal and business transactions
- Inconsistent or thin bank credits
- Poor credit history (for Kishor/Tarun)
- Vague loan purpose or no plan for use of funds
- Existing overdue accounts or high debt
Tips to get approved
- Keep a dedicated business bank account with steady credits
- Submit quotations + a one-page plan: use of funds & expected revenue
- Close small overdue accounts before applying
- Start a category lower (Shishu/Kishor) and step up
- Complete Udyam registration
Frequently Asked Questions
What is the maximum Mudra loan amount in 2026?
Up to ₹20 lakh under the Tarun Plus category, for borrowers who have successfully repaid a Tarun loan. Otherwise the ceiling is ₹10 lakh under Tarun.
Is a Mudra loan really collateral-free?
Yes. No collateral or third-party guarantee is required. Lenders are protected through the Credit Guarantee Fund for Micro Units (CGFMU).
What is the interest rate on a Mudra loan?
There's no fixed government rate. Lenders set it on their MCLR plus a spread — typically around 10%–12% for Shishu, 11%–15% for Kishor and 12%–16% for Tarun/Tarun Plus. Public sector banks usually price lower.
Can a woman entrepreneur get a concession?
Yes. A 0.25% (25 bps) concession is often extended to women through MFIs/NBFCs, and many banks offer their own small rate concessions. Women make up roughly two-thirds of Mudra beneficiaries.
Do I need a CIBIL score for a Mudra loan?
Not mandatory for small Shishu loans up to ₹50,000. For Kishor and Tarun, lenders check your credit history to assess repayment ability, so a clean record helps.
Can I get a Mudra loan for farming?
Direct crop cultivation isn't covered. But allied-agriculture activities like dairy, poultry, fishery, beekeeping and food processing are eligible.
How do I apply for a Mudra loan online?
Apply through the Udyamimitra or JanSamarth portal, which match you to lenders and give an in-principle approval, or apply directly at any bank, NBFC or MFI branch.
Disclaimer: Mudra loan interest rates, category limits and eligibility norms vary by lender and change over time. The figures above are indicative and current as of 2026. MUDRA does not lend directly — verify the latest terms on the official Mudra, Udyamimitra, JanSamarth and SIDBI websites or directly with your lender before applying. Arthzo is an information platform and does not provide loans.