MUDRA Loan 2026: Shishu, Kishor, Tarun and Tarun Plus Limits, Who Qualifies and How to Apply

A MUDRA loan is a business loan of up to ₹20 lakh under the Pradhan Mantri MUDRA Yojana (PMMY) for non-corporate, non-farm micro and small enterprises, in four categories: Shishu up to ₹50,000, Kishor up to ₹5 lakh, Tarun up to ₹10 lakh and Tarun Plus up to ₹20 lakh. Tarun Plus is only for entrepreneurs who have taken and repaid a Tarun loan. You apply to a bank, NBFC or microfinance institution, or online on the Udyamimitra portal. MUDRA itself does not lend, there is no subsidy on the loan, and MUDRA uses no agents.

Sources checked: 29 October 2026

Facts checked on 29 October 2026 against the MUDRA home page, FAQs, offerings page and PMMY bankers' kit on mudra.org.in, and our scheme catalogue.

This is general information, not financial advice. The lender decides whether to lend, how much and at what rate.

Key facts

Category	Loan amount	Notes
Shishu	Up to ₹50,000	One-page application format
Kishor	Above ₹50,000 and up to ₹5 lakh	Three-page indicative format
Tarun	Above ₹5 lakh and up to ₹10 lakh	Three-page indicative format
Tarun Plus	Above ₹10 lakh and up to ₹20 lakh	Only after taking and repaying a Tarun loan

Point	What applies	Where it comes from
Who	Indian citizens with a non-farm income-generating business plan, credit need up to ₹20 lakh	MUDRA FAQ 18
Lenders	Commercial banks, RRBs, small finance banks, NBFCs and MFIs	MUDRA home page
Apply online	udyamimitra.in	MUDRA home page
Subsidy	None on the loan itself	MUDRA FAQ 19
Collateral	Banks mandated not to insist on it for MSE loans up to ₹20 lakh	MUDRA FAQ 25
Interest	Deregulated; banks advised to charge reasonable rates within RBI guidelines	MUDRA FAQ 18 and 32

What are the four MUDRA categories?

MUDRA describes Shishu, Kishor, Tarun and Tarun Plus as stages of growth: the names "signify the stage of growth / development and funding needs" of the micro unit and give "a reference point for the next phase of graduation". The limits are in the table above. Two points people miss:

• Tarun Plus is not open to everyone. It covers loans above ₹10 lakh and up to ₹20 lakh "for those entrepreneurs who have availed and successfully repaid previous loans under the 'Tarun' category". A first-time borrower who needs ₹15 lakh is outside it.
• The category follows the loan amount, not your business size. A shop and a small workshop can both take a Kishor loan; what changes is the amount.

MUDRA's offerings page says more focus is given to Shishu units, then Kishor, Tarun and Tarun Plus, to support new entrepreneurs.

Who can get a MUDRA loan?

MUDRA's FAQ says: "Any Indian Citizen who has a business plan for a non-farm income generating activity such as manufacturing, processing, trading or service sector whose credit need is up to 20 lakh" can approach a bank, MFI or NBFC. Its target clients are the non-corporate small business segment: proprietorship and partnership firms running small manufacturing units, service units, shops, fruit and vegetable vendors, truck operators, food-service units, repair shops, machine operators, artisans and food processors, in rural and urban areas.

MUDRA's pages word the borrower in two ways. The home page speaks of "non-corporate, non-farm small/micro enterprises", while FAQ 38 lists "any individual including women, proprietary concern, partnership firm, private limited company or any other entity" with a loan need up to ₹20 lakh. If your business is a company, ask the lender how it applies the scheme.

Our catalogue entry for the MUDRA loan records it as a scheme for micro enterprises and lists Aadhaar, PAN, business proof, bank statements and quotations as the usual papers. MUDRA's FAQ adds that the documents are as the lending institution asks: a PAN card is not compulsory, though you must meet the lender's KYC (FAQ 31), and income-tax returns are generally not insisted on for small loans (FAQ 36). If you are not sure of your MSME category, our guide to MSME classification limits explains it.

What can a MUDRA loan pay for?

The offerings page lists the main purposes:

• business loans for vendors, traders, shopkeepers and other service activities;
• working capital through the MUDRA Card;
• equipment finance for micro units;
• transport vehicles for commercial use only, including auto rickshaws, e-rickshaws, small goods vehicles and taxis, and tractors, tillers and two-wheelers used commercially;
• activities allied to agriculture, such as pisciculture, bee-keeping, poultry, dairy and food and agro-processing, excluding crop loans and land improvement such as canals, irrigation and wells.

Its illustrative list also covers salons, boutiques, tailoring, repair shops, medicine shops, food units such as papad, pickle, bakery and sweet shops, and textile work such as handloom, powerloom and embroidery.

The MUDRA Card is a RuPay debit card issued against the working-capital part of the loan. It works as a cash credit or overdraft: you draw when you need money and repay when you have surplus cash, which keeps the interest down (FAQ 21 and the offerings page).

Is there a subsidy or collateral?

No subsidy. FAQ 19: "There is no subsidy for the loan given under PMMY." If the loan is linked to a government scheme that gives a capital subsidy, it can still be a MUDRA loan, so a subsidy scheme and MUDRA finance are not exclusive. Our eligibility checker lists the subsidy schemes that may fit your project.

Collateral. FAQ 25 says that, following the recommendations of a working group set up by RBI and accepted by it, banks "have been mandated not to insist for collateral security in the case of loans upto 20 lakh" to units in the micro and small enterprises sector. Life insurance is not mandatory (FAQ 30).

Above ₹20 lakh, CGTMSE guarantees collateral-free bank loans of up to ₹10 crore to micro and small enterprises. Our guide to CGTMSE cover, fee and how to apply has the bands, and PMEGP vs CGTMSE vs MUDRA compares the three schemes.

How do I apply?

1. Choose a lender. Any commercial bank, regional rural bank, small finance bank, NBFC or microfinance institution near you, or apply online through Udyamimitra (udyamimitra.in). MUDRA "does not lend directly".
2. Prepare a simple business plan. What you will do, what you will buy, what it costs, and how the business will repay. Quotations for equipment help.
3. Fill the right form. The bankers' kit has a one-page form and a checklist for Shishu, and a common three-page form for Kishor, Tarun and Tarun Plus.
4. Expect the lender's appraisal. FAQ 27: the loan amount follows the needs of the activity, repayment follows the cash flow, and eligibility follows the lender's norms. For Shishu loans, FAQ 37 gives a normal turnaround of 7 to 10 days once the information is complete.
5. If the branch refuses or insists on collateral, FAQ 34 says a complaint can be made to the bank's regional, zonal or head office under its grievance mechanism.

For a larger Tarun or Tarun Plus loan, a proper project report helps the branch appraise the proposal; our DPR Lite tool drafts a short one.

What are the common mistakes?

• Paying an agent. MUDRA's home page says it engages no agents or middlemen and warns borrowers to keep away from people posing as MUDRA facilitators.
• Expecting a subsidy. PMMY is a loan, not a grant.
• Applying for Tarun Plus first. It needs a repaid Tarun loan.
• Using it for crops or land. Crop loans and land improvement are excluded.

Getting help

Our project finance team prepares the business plan, project report and loan papers for the bank you choose. We do not arrange loans or act for any lender; the lender decides. To ask our expert team about your loan, book a consultation.