PM Mudra Loan Yojana: Millions of young and small entrepreneurs in India are unable to start their own businesses due to a lack of capital. Keeping this challenge in mind, the Central Government launched the Pradhan Mantri Mudra Yojana in 2015. The objective of this scheme is to provide affordable and collateral-free loans to micro and small businesses in the country. Under this scheme, eligible citizens in the Shishu, Kishor, and Tarun categories are provided business loans up to a maximum of ₹10 lakh.

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Objective of PM Mudra Loan Yojana

The main objective of the Mudra Yojana is to provide financial assistance to small-scale business units that have difficulty obtaining bank loans. Its focus is on creating employment, promoting small industries, and strengthening self-employment. This scheme is very beneficial for retail trade, the service sector, agriculture-related activities, and manufacturing units.

Which Businesses Are Covered?

Mudra loans are offered to businesses that are engaged in the non-agricultural and non-corporate sectors. This includes e-rickshaws, taxis, tractors, trolleys, goods transport vehicles, shops, repair shops, gyms, salons, medical stores, photocopy centers, food product manufacturing (such as papad, pickles, biscuits, ice cream), dairy, and fisheries. Micro equipment financing and rural agri-value addition activities are also covered.

Loan Categories and Amounts

The Mudra scheme is offered in three categories: up to ₹50,000 in the Shishu category, between ₹50,000 and ₹5 lakh in the Kishor category, and between ₹5 lakh and ₹10 lakh in the Tarun category. The scheme does not require any collateral or third-party guarantee.

What Can the Loan Be Used For

Mudra loans can be availed for working capital, purchasing machinery, opening shops, purchasing vehicles, setting up micro manufacturing units, and various income-generating activities. Cash withdrawals are also available through the Mudra card if needed.

Application Process

You can apply for a loan by visiting your nearest bank branch or NBFC. The application form can be downloaded from mudra.org.in or applied for online on the bank’s website. Applicants must submit proof of identity, proof of address, business documents, and two passport-size photographs. Once the documents are verified, the loan amount is credited to their account within 7 to 10 working days.

Eligibility Criteria

Any Indian citizen between the ages of 18 and 65 who has a new or existing small business is eligible for a Mudra loan. Loans under this scheme are disbursed by banks, microfinance institutions, and regional rural banks.

Interest Rate and Benefits

The interest rate on Mudra loans depends on the bank and the customer’s profile. The repayment period under the scheme is up to seven years. Women entrepreneurs receive special discounts and processing fee relief. The government also provides a guarantee, eliminating the additional security burden on the borrower.

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Women entrepreneurs can also avail themselves of Mudra loans

The government has provided special incentives under the Mudra scheme to promote women entrepreneurship. Women applicants can avail loans up to a maximum of ₹10 lakh at a low interest rate and without additional fees.