PM Mudra Yojana (PMMY) 2026: Shishu, Kishor, Tarun & Tarun Plus Loan Limits Explained

By Nitish Bharadwaj · Published Jul 20, 2026 · 6 min

Pradhan Mantri Mudra Yojana (PMMY) offers collateral-free loans to non-farm micro and small businesses across four slabs: Shishu (up to ₹50,000), Kishor (₹50,001–5 lakh), Tarun (₹5–10 lakh), and Tarun Plus (₹10–20 lakh) for repeat borrowers who cleared a prior Tarun loan. Backed by the Credit Guarantee Fund for Micro Units (CGFMU), lenders don't ask for collateral against these loans, though a personal guarantee and business proof are required. This guide covers eligibility, the document checklist, how interest rates vary by bank, and how to apply via a lender or the udyamimitra.in portal.

Pradhan Mantri Mudra Yojana (PMMY) remains one of the few ways a small trader, manufacturer, or service business in India can borrow without pledging property or gold as collateral. The scheme covers loans from ₹50,000 up to ₹20 lakh across four slabs, and the government guarantee behind it is why banks are willing to lend without security. Here's exactly which slab fits your business, what the bank will actually ask for, and how rates differ by lender.

The Four Mudra Loan Categories

Tarun Plus was added as the top slab so businesses that outgrow the original ₹10 lakh Tarun ceiling don't have to move to a different loan product entirely — it's available only to applicants who have already taken and repaid a Tarun loan without default, not to first-time borrowers.

Who Can Apply

PMMY is open to any non-farm income-generating enterprise — proprietorships, partnerships, and small private companies engaged in manufacturing, trading, or services, including food processing units, repair shops, small manufacturing units, salons, and transport operators. Agricultural activities directly linked to farming (crop loans, for instance) are excluded, though allied activities like dairy, poultry, and fisheries can qualify. There is no minimum turnover requirement for Shishu-category applicants, which is why it's the most accessible entry point for a genuinely new business.

Collateral-Free — What the CGFMU Guarantee Actually Covers

Mudra loans are collateral-free by design, backed by the Credit Guarantee Fund for Micro Units (CGFMU), which reimburses the lending bank or NBFC for a share of losses if the borrower defaults. This is why a bank will lend ₹5 lakh to a small trader with no property to pledge — the guarantee fund absorbs much of that risk on the lender's books. It does not mean the loan is risk-free for you: a personal guarantee from the proprietor or partners is still standard, and default still damages your CIBIL score and blocks future borrowing exactly as any other unsecured loan would.

Documents You Need

• Duly filled Mudra loan application form (available at the bank branch or via udyamimitra.in)
• Identity and address proof — Aadhaar, PAN, voter ID, or passport
• Proof of business — Udyam registration certificate, GST registration (if applicable), or a business plan for a new venture
• Passport-size photographs of the applicant and co-applicants, if any
• Quotation for machinery or equipment to be purchased, if the loan is for asset purchase
• Bank statements for the last 6 months, for existing businesses seeking Kishor or Tarun loans

How to Apply

1. Approach any public sector bank, private bank, regional rural bank, or NBFC-MFI that participates in PMMY, or apply online via udyamimitra.in
2. Select the appropriate category — Shishu, Kishor, Tarun, or Tarun Plus — based on your funding requirement
3. Submit the application with your business proof, identity documents, and a brief project report describing how the funds will be used
4. The lender assesses the application on business viability and repayment capacity — not on collateral, since none is required
5. Once sanctioned, funds are typically disbursed within 7–15 working days for Shishu and Kishor loans; Tarun and Tarun Plus can take longer given the larger ticket size

Interest Rates — Why They Vary So Much by Lender

There's no single fixed Mudra interest rate — each bank and NBFC prices the loan using its own base rate plus a risk premium tied to the borrower's profile and category. Public sector banks typically price Mudra loans in the 9–12% range, often the cheapest option if you already hold an account there. NBFC-MFIs and fintech lenders extend Mudra loans faster and with lighter documentation, but usually at 14–24%, reflecting their higher risk tolerance and faster turnaround. Always compare at least two or three lenders before signing — the rate spread on an otherwise identical Shishu or Kishor loan can be significant.

For small business owners weighing a Mudra loan against other funding routes, our loan against property vs personal loan comparison covers when a secured option is cheaper for larger amounts, and gold loan vs personal loan is worth checking if you need funds faster than a Mudra application can be processed. If you operate as a private limited company rather than a proprietorship, our guide on company CIBIL vs personal CIBIL for business owners explains which credit history the lender will actually check.