Why is Mudra loan important for Indian entrepreneurs?

To start and run a business in India, you need to have access to easy and affordable credit. That’s where the Mudra loan comes in. Launched in 2015, the Mudra loan is a scheme under the Pradhan Mantri Mudra Yojana (PMMY) that aims to provide financial assistance to micro and small businesses, startups, traders, and entrepreneurs who may not have access to traditional banking credit.

Government data shows that since the launch of the scheme, more than 34 crore Mudra loans have been sanctioned with a total disbursement of  20+ lakh crore.

For 2025, Mudra loans continue to empower entrepreneurs across India. Let’s dive deep into the details:

What Is Mudra Loan And How Does It Help Small Businesses?

Mudra loan is provided to non-corporate, non-farm small and micro enterprises. These are enterprises that are important for the Indian economy and often have difficulty getting loans because they lack collateral.

  • Target Audience: Shopkeepers, small manufacturers, service providers, artisans, traders, and startups.
  • Loan Limit: Up to ₹10 lakh.
  • Collateral: No collateral required.
  • Repayment: Flexible, usually between 3–5 years.

This makes the scheme a game-changer for young entrepreneurs, women-led businesses, and small traders.

How To Apply For Mudra Loan Online In 2025?

Online application for Mudra loan is easy. Application can be made through Udyamitra Portal, individual Bank Websites or directly through Public/Private Sector Banks.

Step-By-Step Process To Apply Online:

  • Log on to Udyamitra portal or partner bank website.
  • Signup with your basic details and make an account.
  • Complete the loan application form with business information.
  • Submit necessary documents (Aadhaar, PAN, business proof, project report, etc.)
  • Select loan type (Shishu, Kishor, Tarun)
  • Apply and view application status through our website

Tip: Preparing a professional project report improves your chances of quick approval. Finline offers a way to generate bank-ready project reports in less than 10 minutes.

What Is The Eligibility And Documents Required For Mudra Loan?

You should be aware of the Mudra loan requirements in terms of eligibility and the documents needed before applying.

Eligibility Criteria:

  • Age: 18-65 years.
  • Applicant: Individual, Proprietor, Partnership, or Company.
  • Business Type: Non-farm, non-corporate small/micro enterprise.
  • Loan Amount: Up to 10 lakh.
  • Credit Score: Ideally 650 and above but first-time borrowers can also be considered.

Documents Required:

  • Aadhaar Card & PAN Card.
  • Proof of business existence (license, registration, GST, shop act, etc.).
  • Bank statements (last 6-12 months).
  • Passport-size photographs.
  • Project report or business plan.

In FY 2023-24, almost 68 percent of Mudra loans were approved to female entrepreneurs, demonstrating its contribution to inclusive growth.

What Is The Mudra Loan Interest Rate In 2025?

A low interest rate is one of the greatest benefits of the Mudra Loan.

  • Average Interest Rate Range (2025): 7.30% to 12% (varies by bank).
  • Mudra loan interest rates are not fixed by RBI, and every bank determines the interest rates depending on risk, category and ability to repay.
  • The government banks such as SBI, PNB, Canara Bank usually provide slightly lower rates than the private banks.
  • Interest concessions may be granted to women entrepreneurs and SC/ST borrowers.

Example:

  • SBI Mudra Loan Interest Rate 2025: Starting from 8.40% p.a.
  • PNB Mudra Loan Interest Rate 2025: Around 9%–11% p.a.
  • HDFC Bank Mudra Loan Interest Rate 2025: ~10%–12% p.a.

What Are The Different Types Of Mudra Loans?

Mudra loans are categorized into three under PMMY based on the business stage:

  1. Shishu Loan
  • Loan Amount: Up to ₹50,000.
  • Most Ideal: New business and start ups that require smaller capital.
  1. Kishor Loan
  • Loan Amount: ₹50,000 – ₹5 lakh.
  • Best For: Businesses in the expansion stage.
  1. Tarun Loan
  • Loan Amount: ₹5 lakh – ₹10 lakh.
  • Best For: Established companies that need to expand even more.

As per data, nearly 40% of Mudra loans are disbursed under the Shishu category, making it the most popular among small entrepreneurs.

Which Banks Offer Mudra Loan? (Mudra Loan Bank List 2025)

Mudra loan bank list consists of all the banks in the public sector, private banks, microfinance banks, and NBFCs.

Popular Banks that will provide Mudra Loans in 2025:

  • Public Sector Banks: State Bank of India (SBI), Punjab National Bank (PNB), Canara Bank, Union Bank, Bank of Baroda.
  • Private Banks: HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank.
  • Regional Rural Banks & NBFCs: Many state-level rural banks and financial corporations.

Tip: Always compare interest rates and repayment terms before choosing a bank.

What Are The Key Benefits Of Mudra Loan In 2025?

  • No collateral required.
  • Low interest rates (around 7.3 percent).
  • Easy repayment tenure (up to 5 years).
  • Extra aid to women, SC/ST, OBC entrepreneurs.
  • Boosts small businesses, self-employment, and startups.

Fact: Mudra Yojana remains popular as more than 6 crore loans were given in 2024.

What Challenges Do Applicants Face While Applying For Mudra Loan?

Despite the availability of Mudra loans, there are certain challenges, which include:

  • High rejection rate due to incomplete documents.
  • Other private banks will impose higher interest.
  • Lack of awareness among rural entrepreneurs.
  • Lack of skills on how to prepare a professional project report.

How To Get Mudra Loan Approved Faster In 2025?

Here are some expert tips:

  • Have an excellent credit score (CIBIL > 650).
  • Write a comprehensive project report (business plan, revenue forecast, plan of repayment).
  • Select the appropriate type of loan (Shishu, Kishor, Tarun).
  • Apply via trusted banks or the official Udyamitra portal.

Conclusion: Why Should Entrepreneurs Take Mudra Loan?

The Mudra loan at PMMY provides the golden chance to the small entrepreneurs, youth and startups in India. It is built in such a way that it eliminates financial barriers with easy eligibility, low interest rates, no collateral, and flexible repayment.

You are opening a small shop, expanding your manufacturing plant or opening a service enterprise – Mudra Loan can provide you with a proper impulse.

However, a professional project report is required in order to have your loan approved within a short time. That’s where Finline helps:

  • Create bank-ready project reports in less than 10 minutes.
  • Affordable pricing for startups and small businesses.
  • All big banks in India accept reports.
  • Saves time and increases chances of quick loan approval.

Therefore, it’s time to act if you want to expand your business in 2025. Get a Mudra loan online and create your project report with Finline to get financed sooner! 🚀

FAQs

Pradhan Mantri Mudra Yojana (PMMY) Mudra loan scheme is aimed at helping micro entrepreneurs, small businesses, and start ups in India. It offers financial support as far as 10 lakhs without collateral. People, individuals, small companies, partnership firms, and sole proprietors who carry out non-farm income-generating activities that are not corporate such as trading, manufacturing, and services can apply.

It is easy to apply to Mudra Loan online in 2025. You would visit the official websites of banks or NBFCs or financial institutions that are involved. Complete the application form and attach the necessary documents such as ID proof, business proof, and project report and submit the form. After confirmation, your loan request will go through the bank. With the help of such platforms as Finline, you can create a project report in 10 minutes to support your application.

 Mudra Loans are categorized into three types based on business needs:

  • Shishu: For loans up to ₹50,000, ideal for small startups.
  • Kishore: For loans between ₹50,001 and ₹5 lakhs, suitable for growing businesses.
  • Tarun: For loans between ₹5 lakhs and ₹10 lakhs, designed for scaling larger businesses.

Almost all leading public sector banks, private sector banks, regional rural banks, small finance banks, cooperative banks, and NBFCs provide Mudra Loans in India. Popular banks include SBI, HDFC Bank, ICICI Bank, Bank of Baroda, Canara Bank, and Punjab National Bank.

The interest rate for Mudra Loans varies depending on the bank and the applicant’s profile. Generally, it ranges from 8% to 12% per annum. Since Mudra Loans are collateral-free, banks may apply slightly different rates based on business risk and repayment capacity.