Starting or expanding a small business often requires financial support. To help small entrepreneurs, the Government of India introduced the Mudra Loan scheme under the Pradhan Mantri Mudra Yojana (PMMY).
This guide explains the complete Apply for Mudra Loan Online process, eligibility criteria, required documents, and important points for 2026. The information is beginner-friendly and based on the official framework. Approval always depends on bank verification and eligibility.
What is Mudra Loan?
Mudra Loan is a government-backed business loan scheme designed to support small and micro enterprises. It provides financial assistance to non-corporate, non-farm small businesses.
The scheme aims to:
- Promote entrepreneurship
- Support startups and small traders
- Encourage self-employment
- Strengthen MSMEs
Who Can Benefit?
Mudra Loans are useful for:
- Small shop owners
- Street vendors
- Service providers
- Small manufacturers
- Startups
- Self-employed professionals
The scheme is particularly helpful for individuals who lack large collateral but need working capital or expansion funds.
What is Mudra Loan?
Mudra Loan is offered under the Pradhan Mantri Mudra Yojana (PMMY).
The scheme is implemented through banks, NBFCs, and microfinance institutions.
Loan Categories
Mudra loans are divided into three categories:
1. Shishu
- Loan amount: Up to ₹50,000
- Suitable for early-stage businesses
2. Kishor
- Loan amount: ₹50,000 to ₹5 lakh
- For growing businesses
3. Tarun
- Loan amount: ₹5 lakh to ₹10 lakh
- For established businesses planning expansion
Collateral Requirement
Generally, Mudra loans are provided without collateral. However, final approval and terms depend on the lending institution’s policies.
Eligibility Criteria
To apply for a Mudra loan, applicants must meet certain basic conditions:
- Must be an Indian citizen
- Must run or plan to start a non-corporate small business
- Business should be in manufacturing, trading, or services sector
- A basic business plan is required
- Good credit history is preferred
- Should not be a loan defaulter
Each bank may have additional internal criteria.
Documents Required
Before starting the PM Mudra loan application process, prepare the following documents:
- Aadhaar card
- PAN card
- Address proof (utility bill, voter ID, etc.)
- Business proof (registration, shop license, GST if applicable)
- Bank statements (last 6 months)
- Passport-size photographs
- Quotation of machinery or equipment (if applying for asset purchase)
Proper documentation improves approval chances.
How to Apply for Mudra Loan Online (Step-by-Step)
Here is the complete Mudra loan apply online process.
Step 1: Visit Official PMMY Portal
Go to the official Mudra website:
The scheme is administered under the oversight of Ministry of Finance.
You can:
- Download application forms
- Read scheme guidelines
- Find participating banks
Step 2: Choose Bank or NBFC
Mudra loans are not directly disbursed by the Mudra website. You must apply through:
- Public sector banks
- Private banks
- Regional rural banks
- NBFCs
- Microfinance institutions
Visit your chosen bank’s official website and check if they offer online application.
Step 3: Fill Online Application
If the bank supports online application:
- Register on the bank’s website
- Select Mudra loan category (Shishu/Kishor/Tarun)
- Enter personal details
- Provide business information
- Specify required loan amount
Be accurate and truthful while filling the form.
Step 4: Upload Documents
Upload scanned copies of:
- Identity proof
- Address proof
- Business proof
- Bank statements
Ensure documents are clear and valid.
Step 5: Bank Verification
After submission:
- The bank reviews your application
- May call for clarification
- May ask for additional documents
- Physical branch visit may be required
Banks evaluate:
- Business feasibility
- Repayment capacity
- Credit history
Approval is not automatic and depends on eligibility.
Step 6: Loan Approval & Disbursement
If approved:
- You receive sanction letter
- Loan agreement is signed
- Funds are credited to your bank account
Always read loan terms carefully before signing.
Interest Rate & Repayment
Interest Rate
There is no fixed interest rate across all banks. The Mudra loan interest rate 2026 depends on:
- Lending bank
- Applicant profile
- Loan amount
- Business risk
Rates may vary between institutions.
Repayment Tenure
Repayment period generally ranges from:
- 3 to 5 years (depending on loan type)
Some loans may offer flexible EMI options.
EMI Calculation
EMI depends on:
- Loan amount
- Interest rate
- Tenure
Banks provide EMI calculators on their websites.
How Long Does Approval Take?
Approval time depends on:
- Bank workload
- Document completeness
- Credit verification
- Business assessment
It may take:
- A few days for smaller loans
- Several weeks for higher amounts
Applicants should stay in contact with the bank for updates.
Common Reasons for Rejection
Mudra loan applications may be rejected due to:
- Poor credit score
- Incomplete documentation
- Weak or unclear business plan
- Existing loan default
- Inadequate repayment capacity
Ensuring proper preparation reduces rejection risk.
Tips to Increase Approval Chances
To improve success rate:
- Prepare a strong business plan
- Maintain good CIBIL score
- Clear previous loan dues
- Apply under correct category
- Provide complete and accurate documents
Banks assess risk carefully, so transparency is important.
Frequently Asked Questions
Is Mudra Loan Interest-Free?
No. Mudra loans are not interest-free. Interest rates vary by bank.
Is Collateral Required?
Generally no collateral is required, but banks may assess risk before approval.
Can a Salaried Person Apply?
Yes, if planning to start a non-corporate small business.
Is Subsidy Provided?
Mudra loan itself is not a subsidy scheme. It is a loan facility. Any subsidy depends on other government programs.
Conclusion
Mudra Loan under the Pradhan Mantri Mudra Yojana is a significant initiative to support small entrepreneurs and MSMEs in India.
To summarize:
- Choose the right loan category
- Prepare complete documentation
- Apply only through official bank or government portals
- Understand that approval depends on eligibility and bank verification
If you are planning to start or expand a small business, the Mudra loan scheme can be a useful financial option when applied responsibly and with proper planning.
Always use official websites and authorized banks to complete the PM Mudra loan application process safely.
