How to Get a MUDRA Loan: Eligibility, Documents & Process

The Pradhan Mantri MUDRA Yojana (PMMY) provides collateral-free loans up to ₹20 lakh to non-corporate, non-farm small and micro enterprises across India. If you are a small business owner, self-employed professional, or aspiring entrepreneur wondering how to get a MUDRA loan, this guide walks you through every step — from checking eligibility to receiving funds in your account.

What Is a MUDRA Loan?

MUDRA stands for Micro Units Development and Refinance Agency. Under PMMY, loans are disbursed through scheduled commercial banks, regional rural banks (RRBs), microfinance institutions (MFIs), and NBFCs. The scheme covers activities in manufacturing, trading, and services sectors. As of FY 2026-27, the upper limit has been enhanced to ₹20 lakh (revised from the earlier ₹10 lakh ceiling under the Tarun category, with the new Tarun Plus tier introduced for repeat borrowers).

MUDRA Loan Categories

Eligibility Criteria

Before applying, confirm that your business and personal profile meet the following conditions:

• You are an Indian citizen aged 18 years or above.
• Your enterprise is a non-farm income-generating activity — retail, manufacturing, food processing, textile, transport, etc.
• The business is not a corporate entity (proprietary firms, partnership firms, and small LLPs generally qualify).
• No existing loan default is recorded against you with any bank or NBFC.
• For the Tarun Plus tier, you must have successfully repaid a previous MUDRA loan.
• There is no minimum turnover requirement for the Shishu category, but lenders may apply internal credit assessments for higher tiers.

Use KyaTax's Loan Eligibility Engine to instantly check which MUDRA category suits your business profile before approaching a lender.

Documents Required

Keep the following documents ready to avoid delays during processing:

• Identity proof: Aadhaar card, PAN card, Voter ID, or Passport
• Address proof: Utility bill, Aadhaar, or rental agreement
• Business proof: Registration certificate, trade licence, Udyam Registration certificate, or GST registration
• Passport-size photographs (typically two)
• Bank statements for the last 6 months
• Income proof: ITR or CA-certified financials for Kishore and above tiers
• Quotation or project report for the machinery or asset to be purchased (if applicable)
• SC/ST/OBC certificate if claiming category-based priority

Step-by-Step Process to Apply

Step 1: Choose the Right Lender

MUDRA loans are disbursed by over 60 scheduled commercial banks, RRBs, cooperative banks, MFIs, and NBFCs empanelled under PMMY. You can approach your existing bank for a smoother process, or visit the official Udyamimitra portal (udyamimitra.in) to compare and apply online.

Step 2: Prepare a Basic Business Plan

For loans above ₹50,000, most lenders expect a brief project report explaining your business activity, revenue model, and how you will use the funds. For Shishu loans, a simple verbal explanation often suffices.

Step 3: Submit the Application

You can apply in two ways:

• Offline: Visit the nearest branch of a MUDRA-empanelled bank, collect the MUDRA loan application form (or download it from the lender's website), attach all documents, and submit to the branch manager.
• Online: Register on udyamimitra.in, fill in the digital application, upload scanned documents, and track status online. PSU banks like SBI, Bank of Baroda, and Canara Bank also offer direct online applications.

Step 4: Verification and Sanction

The lender verifies your documents, checks CIBIL score (a score of 650 or above improves approval chances, though no fixed minimum is mandated by MUDRA), and conducts a basic business assessment. Sanction timelines range from 7 to 30 working days depending on the lender and loan amount.

Step 5: Loan Disbursement and MUDRA Card

Once sanctioned, the loan amount is credited to your business account. Borrowers also receive a MUDRA RuPay card for working capital drawdowns, which functions like an overdraft facility for day-to-day business expenses.

Key Things to Keep in Mind

• MUDRA loans are collateral-free — no security deposit or guarantor is required.
• Interest rates are set by individual lenders; there is no government-fixed rate, so compare across banks.
• Timely repayment builds your credit history and makes you eligible for the Tarun Plus tier in future.
• Women entrepreneurs and SC/ST applicants may receive priority processing and slightly concessional rates from certain public sector banks.

Frequently asked questions

What is the maximum loan amount under MUDRA in FY 2026-27?

As of FY 2026-27, the maximum MUDRA loan amount is ₹20 lakh under the newly introduced Tarun Plus category, available to borrowers who have already successfully repaid a previous MUDRA loan. First-time borrowers can access up to ₹10 lakh under the Tarun category.

Is a CIBIL score required to get a MUDRA loan?

MUDRA guidelines do not mandate a specific minimum CIBIL score, but individual lenders use their own credit assessment policies. A score of 650 or above generally improves your chances of approval, especially for Kishore and Tarun category loans. Shishu loans are often approved even for applicants with limited credit history.

Can I apply for a MUDRA loan online without visiting a bank branch?

Yes. You can apply through the government's Udyamimitra portal (udyamimitra.in) or directly through the online portals of PSU banks such as SBI, Bank of Baroda, and Canara Bank. You upload your documents digitally and track the application status online, though some banks may ask you to visit the branch for final verification.

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