🌱 Udyam Desk
MUDRA Loan 2026: Complete Guide to Collateral-Free Business Loans up to ₹20 Lakh (Application & Status)
What is MUDRA loan (PM MUDRA), Shishu-Kishore-Tarun-Tarun Plus categories, how to apply without collateral, documents, interest rates and status check — a complete guide for small businesses.
Shop, street stall, van, tailoring, mobile repair, food stall, beauty parlour — need a collateral-free loan to start or grow a small business? The central government’s Pradhan Mantri MUDRA Yojana (PM MUDRA) is the most widely used route. Lakhs and crores of entrepreneurs take this loan every year — because no collateral is required and the process is simple.
The four categories — which one is for you?
| Category | Loan limit | For whom |
|---|---|---|
| Shishu | Up to ₹50,000 | New/very small businesses — street stalls, small stock |
| Kishore | ₹50,000–₹5 lakh | Growing an existing business — machinery, stock, shop fit-out |
| Tarun | ₹5–10 lakh | Larger expansion — shop, small unit |
| Tarun Plus | ₹10–20 lakh | Condition: previously taken a Tarun loan and repaid it successfully |
Remember — Tarun Plus is not for everyone; it is only for entrepreneurs who have repaid an earlier Tarun loan well. So repaying your first loan on time actually opens the door to the next, bigger loan.
Which businesses qualify?
Almost all non-agricultural income-generating work — shops and retail, food processing, garments-tailoring, salon/parlour, repair shops, transport (van/auto), allied agricultural activities (dairy, poultry), small manufacturing units. MUDRA does not cover direct cultivation of crops on farmland — that is where the Kisan Credit Card comes in.
How to apply
- Complete Udyam registration (free, takes minutes) — increases your chances of approval
- A one-page project report — what you will do, how much it costs, how much you will earn
- Documents: Aadhaar, PAN, address proof, passport photo, bank statement (last 6 months if it is an existing business)
- Apply — at any bank branch (your own account’s bank is easiest), or online via jansamarth.in or udyamimitra.in
- On approval, the money is credited directly to your account / paid directly to the supplier
Costs and interest
- No government fee; Kishore/Tarun may carry the bank’s normal processing charges
- Interest varies by bank, 8.5–12% — ask 2–3 banks and compare
- Timely repayment builds your credit score — making the next loan even easier
Status check and common reasons applications get stuck
- Status: at the branch where you applied, or on the portal used for the online application
- Common reasons applications get stuck: an unclear project report, irregular transactions in the bank statement, an old default on CIBIL
- If it is your first loan, start small — moving up from Shishu is the smoothest path
Read more: All routes to collateral-free business loans, Udyam registration and Udyam portal.
🪜 Step-by-step guide
- Business plan and numbers
How much money you need, what for (stock/machinery/vehicle), monthly income — write a one-page project report.
- Get Udyam registration
Free Udyam registration speeds up approval — it can be done in minutes with Aadhaar and PAN.
- Choose a category and apply at a bank
Shishu (up to ₹50,000), Kishore (₹5 lakh), Tarun (₹10 lakh), Tarun Plus (₹20 lakh) — submit the form as per your requirement.
- Approval and monitoring
The bank examines the project and sanctions the loan; repay instalments on time — this builds eligibility for the next, bigger category.
❓ Frequently asked questions
What is the maximum limit of a MUDRA loan?
Shishu ₹50,000, Kishore ₹5 lakh, Tarun up to ₹10 lakh. The 'Tarun Plus' category allows up to ₹20 lakh — but only for entrepreneurs who have previously taken a Tarun category loan and repaid it successfully.
Does a MUDRA loan require collateral?
No category requires security collateral — that is the main appeal of MUDRA. However, the bank decides based on business viability, credit history and the project.
What is the interest rate on a MUDRA loan?
The government does not fix it — banks lend at their own rates, generally 8.5% to 12%. Many banks offer the lowest rate on Shishu loans. Compare a few banks before deciding.
How do I check my MUDRA loan status?
At the branch where you applied, or, if you applied online, in your account on that portal (jansamarth.in or the bank's). Updates on the application also arrive on udyamimitra.in.