The Pradhan Mantri Mudra Loan Yojana (PMMY) is one of the most impactful financial schemes launched by the Government of India to support small businesses, self-employed individuals, and new entrepreneurs. Launched in 2015, the Mudra Yojana continues to empower millions by giving them easy access to collateral-free loans up to ₹10 lakh for business activities.
As India moves towards a self-reliant economy through initiatives like Atmanirbhar Bharat, the Mudra Loan Yojana plays a critical role in promoting small-scale entrepreneurship, women-led businesses, startups, and rural employment. In 2025, the scheme remains highly relevant for individuals looking for financial support to start or expand their businesses.
This detailed blog gives you a complete overview of PM Mudra Loan Yojana 2025, including types of loans, eligibility, benefits, documents needed, interest rates, and how to apply.
✅ What Is PM Mudra Loan Yojana?
PM Mudra Loan Yojana provides financial assistance to individuals who want to start or grow small businesses. Unlike traditional loans, Mudra loans are collateral-free, meaning borrowers don’t need to provide any property or asset as security.
✅ Key Features:
- Loan amount: ₹10,000 to ₹10 lakh
- No collateral required
- Low interest rates (depending on banks)
- Benefits for women entrepreneurs
- Encourages small business growth
- Available in all banks, NBFCs, and microfinance institutions
The loan is designed for small business owners engaged in activities such as retail shops, service centers, small manufacturing units, startups, artisans, food processing units, and more.
✅ Types of Mudra Loans
PM Mudra Loan is divided into three categories based on the business stage and capital requirement.
✅ 1. Shishu Loan (Up to ₹50,000)
This category is ideal for beginners or people planning to start a small business.
Examples:
- Tea stall
- Grocery shop
- Tailoring business
- Vegetable seller
- Small home-based work
✅ 2. Kishor Loan (₹50,000 – ₹5 lakh)
This loan suits businesses that have already started but need more funds to grow.
Examples:
- Beauty salon
- Repair shop
- Online startup
- Trading business
- Small manufacturing unit
✅ 3. Tarun Loan (₹5 lakh – ₹10 lakh)
This is for businesses ready to expand on a larger scale.
Examples:
- Medium-sized manufacturing
- Restaurant expansion
- New branch of business
- Service center upgrade
Each category ensures that entrepreneurs at different growth stages get access to financial support.
✅ Who Can Apply for PM Mudra Loan? (Eligibility)
Mudra Loan is meant for Indian citizens running income-generating businesses.
✅ Eligible Applicants:
- Shop owners
- Small business owners
- Self-employed individuals
- Startups
- Women entrepreneurs
- Youth planning to start business
- Small manufacturers
- Artisans, craftsmen, freelancers
- Transport operators (e-rickshaw, auto, taxi)
✅ Ineligible:
- Businesses that are not legally registered
- Individuals with high existing loan defaults
- Agricultural farming activities (other than allied services)
✅ Documents Required for Mudra Loan
To apply for a Mudra loan, you must provide:
✅ Personal Documents:
- Aadhaar Card
- PAN Card
- Address Proof
- Passport-size photos
✅ Business Documents:
- Business plan
- Registration certificate (if applicable)
- GST number (optional for small businesses)
- Bank statements of last 6 months
✅ Additional:
- Income proof
- Quotation for machinery/equipment
Complete documents ensure faster approval.
✅ Interest Rates & Repayment Period
Mudra loans are offered by different banks, so the interest rate varies slightly, but generally:
✅ Interest Rate:
7% to 12% per annum, depending on:
- Bank type
- Loan category
- Credit score
- Business profile
✅ Repayment Tenure:
3 to 5 years, with a possible extension depending on the bank.
Banks also offer moratorium period, meaning you can start paying EMI after a few months of getting the loan.
✅ Benefits of PM Mudra Loan Yojana
The scheme offers several advantages that make it highly beneficial for small business owners.
✅ 1. No Collateral Needed
Borrowers don’t need to provide any property or asset as security.
✅ 2. Very Easy to Apply
The application process is simple and can be done both online and offline.
✅ 3. Boosts Small Businesses
Helps millions of people start or expand their local businesses.
✅ 4. Special Schemes for Women
Interest rate concessions for women applicants encourage female entrepreneurship.
✅ 5. Credit Guarantee
Loans are supported under the Mudra Credit Guarantee Scheme for better approval chances.
✅ 6. Lower Interest Rates
Cheaper compared to private loans or credit card borrowing.
✅ 7. Helps Generate Employment
Supporting small businesses helps create local jobs.
✅ Which Businesses Can Get Mudra Loan?
Mudra loans cover a wide range of income-generating activities:
✅ Service Sector:
- Beauty parlors
- Coaching centers
- Photocopy shops
- Repair centers
✅ Trading Sector:
- Grocery shops
- Mobile shops
- Stationery stores
- Clothing stores
✅ Manufacturing Sector:
- Candle making
- Packaging
- Pickle and snacks manufacturing
- Furniture making
✅ Transport:
- Auto, taxi
- E-rickshaw
- Goods transport vehicles
✅ How to Apply for PM Mudra Loan (Step-by-Step Guide)
Here is the simplified process:
✅ Step 1: Choose Your Loan Category
Decide whether you need Shishu, Kishor, or Tarun loan.
✅ Step 2: Visit Any Bank
You can apply through:
- Public sector banks
- Private banks
- Small finance banks
- Microfinance institutions
- Regional rural banks
✅ Step 3: Fill the Mudra Loan Application Form
Include details like:
- Name
- Address
- Business type
- Purpose of loan
- Loan amount
✅ Step 4: Submit Documents
Provide identity proof, business proof, and bank statements.
✅ Step 5: Business Verification
The bank may verify your business plan or visit your shop.
✅ Step 6: Loan Approval & Disbursement
Once approved, the loan is credited to your bank account.
✅ Common Reasons for Loan Rejection
Your application may be rejected if:
- Poor credit score
- Incomplete documents
- No clear business plan
- Previous loan defaults
- Bank account irregularities
Fixing these issues increases approval chances.
✅ Final Verdict
The PM Mudra Loan Yojana 2025 is one of the best opportunities for small business owners, youth, and women entrepreneurs to start or expand their businesses. With easy eligibility, no collateral requirement, simple documentation, and attractive interest rates, the scheme continues to uplift millions of aspiring entrepreneurs across India.
Whether you want to open a shop, start manufacturing, or expand your existing business, Mudra Loan offers the financial support necessary to bring your ideas to life. If you have a clear business plan and the determination to grow, Mudra Loan can become the foundation of your entrepreneurial journey.