Published on Apr 22, 2025Updated on Feb 2, 2026
Whether you aspire to run a small-scale manufacturing unit or a service-based venture like a salon or delivery business – every venture requires adequate funding. If a lack of capital is holding your business back, the Pradhan Mantri MUDRA Yojana (PMMY) could provide the necessary financial support.
The MUDRA loan limit has been raised from INR 10 lakhs to INR 20 lakhs, beneficial for entrepreneurs seeking extensive growth and expansion. The higher limit, under the new Tarun Plus category, is available for entrepreneurs who have previously availed and successfully repaid loans under the Tarun category. The guarantee for PMMY loans of up to INR 20 lakhs will be covered under the Credit Guarantee Fund for Micro Units (CGFMU).
The PMMY scheme is a financial initiative by the Government of India. It offers loans of up to INR 20 lakhs to small and micro-entrepreneurs for non-agricultural, income-generating activities through various lending institutions. The best part? You don't need to pledge any collateral.
MUDRA stands for Micro Units Development and Refinance Agency. It was established by the Government of India on April 8, 2015, to promote and refinance micro-enterprises.
The PM MUDRA loans come in structured categories to support entrepreneurs at different stages of their business journey. Each category is tailored to suit the specific financial needs of micro and small enterprises, ensuring that access to credit grows along with the business.
This is the entry-level category under the MUDRA scheme, designed for individuals who are in the early stages of setting up their business. The Shishu loan is ideal for starting small ventures such as home-based businesses, street vending, or service-oriented micro-enterprises.
Kishor loans are aimed at businesses that have moved beyond the initial stage and now require funding to expand or stabilise operations. This could include purchasing equipment, managing working capital, or increasing production.
The Tarun category is designed for more established businesses ready to scale up significantly. These loans can support expansion into new markets, acquisition of advanced machinery, or hiring and infrastructure development.
Tarun Plus is specifically intended for entrepreneurs who have previously availed and successfully repaid loans under the Tarun category and are now looking to take their business to the next level.
This tiered loan structure ensures that funding is aligned with the specific needs and growth stages of a business. It helps prevent over-borrowing in early stages, promotes responsible credit usage, and encourages entrepreneurs to build strong financial discipline. As businesses grow, they can qualify for higher loan amounts, with each level acting as a stepping stone to long-term success.
The recent increase in the loan limit aims to empower entrepreneurs with greater financial flexibility. This enhancement supports business expansion, acquisition of advanced machinery, and entry into new markets. It encourages responsible borrowing by rewarding entrepreneurs who have successfully repaid previous loans, fostering a culture of financial discipline.
The general eligibility requirements for Pradhan Mantri MUDRA loans include:
Commonly required documents include:
Applications can be made through the online Udyamimitra portal or by approaching lending institutions that are participating in the PMMY scheme.
*Please refer to the official PM MUDRA website for the most up-to-date information on eligibility requirements, documents, and the application process.
The Pradhan Mantri MUDRA Yojana (PMMY) continues to be a vital tool for empowering entrepreneurs and encouraging the growth of MSMEs in India. With the recent enhancements, the scheme is better equipped to support businesses in their expansion endeavours, contributing to the nation's economic progress.
If you're exploring financing options to support your enterprise growth, SMFG India Credit offers unsecured business loans of up to INR 75 lakhs* at competitive interest rates and flexible loan tenures. Please note that to qualify, your business should have been operating for at least 3 years. If this is not the case for your enterprise, consider applying for a personal loan of up to INR 30 lakhs* with a co-applicant having a strong credit score and stable income. Apply online today or contact us for more information.
* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us
Indian citizens aged 18 and above, running non-farm micro or small enterprises such as shopkeepers, artisans, service providers, and small manufacturers, are eligible to apply under the Pradhan Mantri MUDRA Yojana.
The scheme aims to promote financial inclusion by providing collateral-free loans to micro and small businesses, encouraging self-employment, supporting income generation, and boosting economic activity, especially in underserved and informal sectors.
Announced in Budget 2024–25, the PMMY scheme increased the loan limit from INR 10 lakhs to INR 20 lakhs – introducing a new “Tarun Plus” category for entrepreneurs who have successfully repaid previous MUDRA loans.
Under PMMY, loans are offered in four categories: up to INR 50,000 (Shishu), INR 50,001–INR 5 lakhs (Kishor), INR 5–10 lakhs (Tarun), and INR 10–20 lakhs (Tarun Plus), depending on the business stage and credit history.
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