The Pradhan Mantri Mudra Yojana (PMMY) is a government scheme, launched in 2015, that supports loans to micro and small non-farm businesses — shopkeepers, traders, small manufacturers, service providers, artisans and more. The loans are given by banks, NBFCs, small finance banks and microfinance institutions; the scheme sets the categories and limits.
The four categories
| Category | Loan amount |
|---|---|
| Shishu | Up to ₹50,000 |
| Kishore | Above ₹50,000 up to ₹5 lakh |
| Tarun | Above ₹5 lakh up to ₹10 lakh |
| Tarun Plus | Above ₹10 lakh up to ₹20 lakh — for borrowers who have taken and repaid a Tarun loan |
Tarun Plus was added after the Union Budget 2024-25, raising the overall ceiling from ₹10 lakh to ₹20 lakh.
Who can apply
- Individuals, proprietorships, partnerships and small companies running or starting a non-farm income-generating activity in manufacturing, trading or services, including activities allied to agriculture.
- The business must fit the lender's own criteria — Mudra sets the framework, but the lender decides whether to lend and how much.
What it can fund
Working capital, buying equipment or machinery, shop renovation, vehicles for business use, and other business needs within the limits.
Documents usually asked for
- KYC of the applicant — PAN, Aadhaar
- Proof of business — Udyam registration, GST, shop licence, or other proof
- Business address proof
- Bank statements
- A simple project report or quotation for larger amounts
A Udyam registration is free and makes the business easy to verify.
Common myths
- "Mudra loans are free money." No — they are loans with interest that must be repaid, and defaults affect your credit report.
- "Anyone gets a Mudra loan." The lender still checks your business and repayment ability.
- "You need an agent." You can apply directly at a participating bank or lender. Be careful of anyone charging a fee to "get your Mudra loan approved" — see how to avoid loan fraud.
Mudra or a regular business loan?
For a very small or first-time business, Mudra categories can be a good route through participating lenders. For larger amounts, or when you need a quick decision based on your banking history, a regular business loan or MSME loan may suit better. Read our MSME loan guide and check business loan eligibility.
This guide is general information, not financial advice. Interest rates, fees, eligibility and other terms are set by each lender and can change; the figures in examples are illustrative only. Oxon Fintech is a loan facilitation platform, not a lender — loans are sanctioned and disbursed by our lending partners.