PM Mudra Yojana loans are meant for small, non-farm income-generating businesses — and because they are collateral-free, lenders check eligibility carefully. This guide covers who qualifies, what businesses are covered, category-wise requirements and the reasons applications get rejected.
Basic eligibility
- Indian citizen aged 18 or above (most banks cap at 65 at loan maturity)
- Running or starting a non-farm income-generating activity — manufacturing, trading, services, or allied-agriculture (dairy, poultry, fishery, beekeeping)
- Loan requirement within the PMMY limits (up to ₹20 lakh under Tarun Plus)
- Not a defaulter to any bank or financial institution
- Individuals, proprietorships, partnerships, and small companies can all apply
Category-wise requirements
| Category | Amount | Typical expectation |
| Shishu | Up to ₹50,000 | Business idea/activity proof; simplest documentation |
| Kishor | ₹50,001 – ₹5 lakh | Existing activity or solid plan, bank statements, quotations |
| Tarun | ₹5 – 10 lakh | Established business with financials and turnover proof |
| Tarun Plus | ₹10 – 20 lakh | Previous Tarun loan availed and repaid successfully |
What counts as an eligible business
- Shops, retail and trading outlets, vegetable/fruit vendors, street vendors
- Food processing, papad/pickle/snack units, tailoring, handicrafts
- Transport — auto rickshaw, e-rickshaw, goods carriers, taxis
- Services — salons, repair shops, coaching, photocopy/DTP centres, gyms
- Allied agriculture — dairy, poultry, fishery, apiculture (not crop loans)
Pure agriculture (crop cultivation) and personal consumption loans are not covered — those go through KCC and other schemes.
Apply free on Udyamimitra or at any bank branch.
Why applications get rejected
- Poor credit history — existing defaults or very low credit score
- Vague business plan — no clarity on how the money will be used or repaid
- Mismatch between loan size and cash flow — asking ₹8 lakh for a business showing ₹5,000/month income
- Incomplete KYC/business proof — missing Udyam registration, licences or address proof
Frequently asked questions
Do I need collateral or a guarantor?
No. Mudra loans are collateral-free by design and covered under the CGFMU credit guarantee. Banks cannot demand collateral for PMMY loans.
Is there a minimum credit score?
No official cutoff, but most lenders prefer a reasonable score. First-time borrowers with no credit history can still get Shishu loans with a good plan.
Can salaried people apply?
The loan must fund a genuine business activity. A salaried person starting a side business can apply for that business, but the loan cannot be used for personal needs.
Related guides
Disclaimer: PMYojnaUpdates.com is an independent information portal, not affiliated with any government department. Always use the official site mudra.org.in for applications and status checks.