Pradhan Mantri Mudra Yojana – Small Business Loans

Overview

Pradhan Mantri Mudra Yojana (PMMY) is a central government scheme that provides loans up to Rs. 10 lakh to non-corporate, non-farm small and micro enterprises. The scheme is implemented through banks, microfinance institutions, and NBFCs across India.

Loans under PMMY are offered in three tiers: Shishu (up to Rs. 50,000), Kishore (Rs. 50,001 to Rs. 5 lakh), and Tarun (Rs. 5 lakh to Rs. 10 lakh), allowing entrepreneurs to access the right level of funding for their business stage.

Objective

The scheme aims to fund the vast universe of small and micro enterprises that are often excluded from formal credit channels. It promotes self-employment, entrepreneurship, and grassroots economic growth.

MUDRA also helps informal businesses transition into the formal financial system, opening doors to further credit and growth.

Benefits

• Collateral-free loans across all three tiers
• Competitive interest rates set by lending institutions
• Support for both new startups and existing micro enterprises
• Working capital provided via a MUDRA card for ongoing needs

Eligibility

• Indian citizens running non-farm micro or small enterprises
• Businesses in manufacturing, trading, or the services sector
• Both new and existing businesses are eligible to apply
• No minimum turnover requirement for Shishu and Kishore categories

Exclusions

• Purely agricultural activities generating farm income
• Businesses needing loans above Rs. 10 lakh under PMMY
• Applicants with poor credit history or unresolved loan defaults

Application Process

Applicants can approach any participating bank, MFI, or NBFC. Applications can also be submitted online through the Udyamimitra portal. The lender evaluates the business plan and creditworthiness before sanction.

Documents Required

• Identity proof (Aadhaar, PAN card)
• Address proof
• Passport-size photographs
• Business description or activity plan
• Bank statements for existing businesses
• Category certificate (SC/ST/OBC) if applying under priority categories