Mudra Loan Scheme Explained: How To Get Business Loan Without Collateral In 2026

We often have an idea and even a foolproof plan to start a business; however, one thing that stands as a prime obstacle in the road to turning the idea into an execution phase is 'funding'. In such a situation, people often think of taking a loan from a bank; however, securing a collateral-free loan from a bank is not an easy task. Meanwhile, applying for a loan under Pradhan Mantri Mudra Yojana (PMMY) could give wings to your business. 

Mudra Yojna is a government scheme that gives collateral-free business loans up to Rs 20 lakhs to small and micro-enterprises. To get a loan under the scheme, you do not have to pledge security like your house or land. This scheme is designed to help small businesses in the trading, manufacturing, and service sectors.

Mudra Yojna: Four Loan Categories 

The scheme divides loans into four types based on the scale of the business. The first category is Shishu- under this, an early-stage or small business can get a loan of up to Rs 50,000. The second one is Kishore, which allows growing businesses to avail a loan between Rs 50,001 and Rs 5 lakhs. 

The next category is Tarun, which offers a loan amount from Rs 5,00,001 to Rs 10 lakhs for business units which are a bit established. The last category is Tarun Plus, which offers a loan amount from Rs 10,00,001 to Rs 20 lakhs for top-performing units with a perfect track record of a previous Tarun loan. 

Also Read: West Bengal Budget 2026: New Airports, Fresh Jobs To Free Bus Service For Women; Key Announcements

Who Can Apply?

Any Individuals, proprietary firms, partnerships, and private companies can get a loan under the scheme. More specifically, an owner of a small shop, a repair service provider, a person having a food processing unit or eateries, taxi operators and others can get an easy loan under the Mudra scheme. It also covers small farming tasks like fisheries and poultry.

To be eligible for the loan, the applicant must not be a defaulter to any bank. A credit score of 650 or more is helpful for larger amounts and a decent interest rate. 

It is a no-collateral loan, and if a person or business wants to close the loan early, then no processing fees or charges are applied. 

The borrower will get a Mudra Card--a Rupay card-- to easily withdraw daily cash for business operations.

Documents You Will Need 

For ID Proof: Aadhaar card, PAN card, or Voter ID.

Address Proof- Electricity bills or house registration. 

Business Proof: Udyam Registration Certificate, business license, and GST details. 

Financial Proof: Bank account statements for the last 6 months. 

How to Apply Online 

-You need to visit the official digital lending portal, like JanSamarth Portal or UdyamiMitra Portal and register yourself with your mobile number and email ID. 

-In the next step, you need to choose a loan type-- Shishu, Kishore, Tarun, or Tarun Plus. 

-Fill out personal and business details and then upload scanned documents. 

-In the last step, submit the digital application. 

The process can be completed by visiting any local commercial bank, regional rural bank, or NBFC branch by filling out the PMMY application form. The copy can be submitted to the branch manager, attaching physical copies of your documents.

Interest Rates 

When the scheme was launched in 2015, the initial loan amount limit was up to Rs 10 lakhs. However, the amount was raised to Rs 20 lakh later. The current interest rates in 2026 generally range from 8.5% to 18% per annum, depending entirely on the lender and your business profile.