Pradhan Mantri Mudra Yojana (PMMY): A Complete Guide for Startups and MSMEs

What is the Pradhan Mantri Mudra Yojana (PMMY)?

The Pradhan Mantri Mudra Yojana (PMMY) is a flagship loan scheme launched by the Ministry of Finance, Government of India in April 2015. The goal is simple to provide financial support to small businesses, startups, and micro-entrepreneurs who want to grow their business but lack formal funding options.

This scheme empowers individuals and small business owners to get collateral-free business loans up to ₹20 lakh for income-generating activities in manufacturing, trading, or services including allied agricultural activities like dairy, poultry, or beekeeping.

When Was PMMY Launched and Why?

PMMY was launched on 8th April 2015 by the Hon’ble Prime Minister of India, Shri Narendra Modi, under the “Funding the Unfunded” initiative.

Its main aim was to boost self-employment, encourage entrepreneurship, and help Micro and Small Enterprises (MSEs) access formal banking credit instead of relying on moneylenders or informal sources.

Who Can Apply for Mudra Yojana?

This scheme is designed especially for:

• MSMEs in manufacturing, trading, and service sectors
• Startups that want to begin or expand small-scale business activities
• Self-employed professionals (like tailors, mechanics, beauticians, shopkeepers, or artisans)
• Micro-entrepreneurs engaged in small income-generating activities

The scheme supports non-corporate, non-farm businesses including millions of small enterprises like fruit vendors, service providers, repair shops, and local manufacturers.

Benefits & Special Features of the Mudra Loan Scheme

The Mudra Yojana is not just a loan. It’s a complete financial support system for growing businesses.

Key Benefits:

✅ Collateral-Free Loans – No need to provide property or asset as security.
✅ Loan up to ₹20 Lakh – Based on business category (Shishu, Kishore, Tarun, Tarun Plus).
✅ Low Processing Fee – Especially for Shishu category loans (up to ₹50,000).
✅ Flexible Repayment Tenure – Easy EMIs with terms decided by lending institutions.
✅ Financial Inclusion – Promotes banking access for small entrepreneurs across rural and urban India.
✅ Allied Activities Covered – Even small dairy, poultry, and agricultural-related trades are eligible.

Mudra Loan Categories

The PMMY scheme is divided into four categories based on the stage of business growth and funding needs:

Interest Rate and Processing Fees

• Interest rates are decided by Member Lending Institutions (MLIs) such as banks and NBFCs, based on RBI guidelines.
• Generally, interest rates range between 8% to 12% per annum depending on the borrower’s profile.
• No processing fee for Shishu loans (up to ₹50,000).
• For other categories, a minimal processing fee may apply.

Eligible Lending Institutions

You can apply for a Mudra loan through:

• Public Sector Banks
• Private Sector Banks
• Regional Rural Banks
• Cooperative Banks
• Microfinance Institutions (MFIs)
• Small Finance Banks (SFBs)
• Non-Banking Finance Companies (NBFCs)

Documents Required

For Shishu Loan (Up to ₹50,000)

• ID Proof (Aadhaar, PAN, Voter ID, etc.)
• Address Proof (Utility bill, Passport, etc.)
• 2 Passport-sized photos
• Business registration or quotation for machinery/equipment

For Kishore, Tarun & Tarun Plus Loans

• ID and Address Proof of Business
• 6-month bank statement
• Income Tax Returns and Balance Sheet (if applicable)
• Business plan or project report
• Partnership deed or Memorandum of Association (for companies)

How to Apply for a Mudra Loan

You can apply online through the Udyamimitra or Jan Samarth portal.

Step-by-Step Process:

1. Visit the official website – https://www.udyamimitra.in
2. Click on “Apply Now for Mudra Loan.”
3. Choose applicant type – New Entrepreneur / Existing Entrepreneur / Self-Employed Professional.
4. Enter your personal details (Name, Mobile, Email) and verify using OTP.
5. Fill in business information, choose your loan category (Shishu, Kishore, Tarun, or Tarun Plus).
6. Upload all required documents.
7. Submit and note the Application Number for tracking.

You can also visit any bank branch and apply offline.

Available for Which States?

The Pradhan Mantri Mudra Yojana is a pan-India scheme, available in all states and union territories. From urban startups in Delhi and Mumbai to rural entrepreneurs in Assam or Rajasthan, anyone meeting eligibility conditions can apply.

Budget and Financial Impact

Since its launch, PMMY has been one of the largest government-backed loan schemes in India.

• Total Budget Allocated (2024–25): ₹4.5 lakh crore.
• Loans Disbursed Since 2015: Over 48 crore loans sanctioned.
• Total Value: More than ₹27 lakh crore disbursed till 2025.
• Women Entrepreneurs: Around 69% of total beneficiaries are women.

These numbers show how Mudra has transformed small businesses into successful MSMEs, fueling India’s entrepreneurship ecosystem.

How Many Businesses Have Benefited?

Till 2025, more than 48 crore entrepreneurs have availed benefits from this scheme.
Thousands of startups, small traders, artisans, and women entrepreneurs have successfully expanded their business through Mudra loans.

StartupFlora: Your Trusted Scheme Guide for Business Growth

Navigating government loan schemes can be confusing from eligibility to document submission. That’s where StartupFlora helps.

At StartupFlora, we assist entrepreneurs and MSMEs in:

• Identifying the right government scheme for your business
• Helping you prepare project reports and applications
• Guiding you through the approval and documentation process

Whether you’re looking for Mudra Loans, PMEGP Grants, or Startup India Funding, StartupFlora is your growth partner in getting the right financial support.

Similar Government Schemes for Business Growth

If you’re exploring funding options beyond Mudra, here are some similar schemes worth checking:

1. PMEGP (Prime Minister’s Employment Generation Programme) – Offers subsidy-based loans for manufacturing and service units.
2. CGTMSE Scheme – Provides collateral-free loans to MSMEs.
3. Stand-Up India Scheme – Empowers women and SC/ST entrepreneurs to start businesses.
4. Startup India Seed Fund Scheme – Grants up to ₹20 lakh for early-stage startups.
5. Credit Linked Capital Subsidy Scheme (CLCSS) – Offers subsidy for technology upgradation.

Conclusion

The Pradhan Mantri Mudra Yojana (PMMY) continues to empower India’s small businesses and startups by providing easy access to credit without heavy paperwork or collateral. Whether you’re a street vendor, a small manufacturer, or a growing MSME. This scheme gives you the financial wings to grow and contribute to India’s economy.

If you’re planning to expand your business or need help applying, StartupFlora is ready to guide you every step of the way.

Frequently Asked Questions (FAQs)

Q1. Who is eligible for a Mudra Loan?
Any individual, startup, or MSME involved in income-generating activities in the non-farm sector (manufacturing, trading, or services) is eligible.

Q2. What is the maximum amount I can get under Mudra Yojana?
You can get up to ₹20 lakh under the Tarun Plus category.

Q3. Is there any subsidy in Mudra loans?
Mudra loans are not subsidy-based; they are collateral-free loans at low interest rates.

Q4. Can I apply for a Mudra Loan online?
Yes, you can apply through udyamimitra.in or jansamarth.in.

Q5. Are startups eligible for Mudra Loans?
Yes, startups engaged in trading, manufacturing, or service-related businesses are eligible.

Q6. How long does it take to get loan approval?
For Shishu loans, it usually takes 7–10 working days, depending on bank processing.

Q7. Can I apply if I already have another business loan?
Yes, but your repayment history should be clean, and you should not be a defaulter.