Mudra Loan:

MSMEs or Micro, Small and Medium Enterprises in India have emerged as the backbone of the country’s economy. As per the MSME Ministry’s annual report for FY2019, there were about 6.33 crore such industries in the country, making the sector one of the leading contributors to the economy.

To further boost the growth of this sector, the government has introduced several financing schemes. Among these, Mudra loans offered under PMMY gained rapid prominence due to their ease of access.

What Are Mudra Loans?

As per the 2013 NSSO survey, there were about 5.77 crore micro and small business units in India, mostly comprising the likes of individual proprietorships. However, these units suffered severe financial insufficiency due to a lack of access to formal lending services. 

To address this issue, the government introduced the Pradhan Mantri Mudra Yojana on 8th April 2015 to make affordable financing more accessible to the country’s MSMEs. 

The Micro Units Development and Refinance Agency Limited (or MUDRA) was then formed under the aegis of PMMY to facilitate financing for the country’s micro-business sector. It lends support to various financial lenders across India to aid in the development of MSMEs by offering Mudra loans

MSMEs looking to avail financial support can approach any lending institution and apply for such a loan.

What Are The Products Offered Under Mudra?

Financial lenders across the country, including banks, NBFCs and MFIs, notified under MUDRA offer these loans under three distinct categories. 

These are as follows –

Loan Category




Up to Rs. 50,000

Individuals planning to set up their own businesses mostly avail these loans. Established business owners also opt for Sishu loans to finance machinery purchase for their businesses.


Between Rs.50,000 and Rs. 5 Lakh

Business owners looking to expand the scope of their ventures avail this category of loan. Loans availed under the Kishor category are mostly invested in infrastructural development, working capital, and such.


Between Rs. 5 Lakh and Rs. 10 Lakh

Owing to the high funding value, Tarun loans are opted for by individuals with already established businesses, seeking capital for further expansion.

Individuals can apply for such government Mudra loans against attractive interest rates, set as per RBI guidelines.

Alternatively, business owners looking to avail working capital can make use of invoice discounting services provided by integrated cash flow solutions provider KredX to meet their business requirements with ease.

What Are The Benefits Offered By Mudra Loans?

Apart from boosting cash inflow for the country’s MSME sector, these loan schemes also offer a plethora of other benefits. These include – 

  • The loans are unsecured in nature, which eliminates the need to pledge collateral to avail the advance.
  • Government Mudra loans are available for both funded and non-funded categories, thus offering flexibility in fund utilisation.
  • Applicants do not need to bear any processing charges to avail the loan.
  • These loans are available as overdrafts, term loans, bank guarantees or letters of credit, helping applicants meet a wide variety of requirements.
  • These loan schemes do not come with any minimum borrowing limit.

Due to several benefits offered under these loans, they are one of the most convenient means of financing for small business owners.

Sectors Covered Under The Mudra Scheme:

Business owners covered under the following list of industries and occupations are eligible for a loan under the Mudra scheme – 



Traders and shop owners

Business owners trading in chemicals, textiles, agricultural products, etc. are included under this category. Service enterprises, shop owners, and other non-farm income-generating activities are also eligible for a loan under Pradhan Mantri Mudra Yojana

Community, personal and social service sector

This category includes owners of boutiques, salons, beauty parlours, Xerox shops, automobile repair shops, general stores, clothes and accessories shops, courier service shops, etc.

Non-corporate small businesses

Small manufacturing units for services and products comprising proprietorship and partnership firms come under this category. Applicants belonging to this category can avail the loan to finance equipment purchase to set up their businesses.

Transport services

Under this sector, individuals can avail a Mudra loan to purchase vehicles for their businesses, including goods carriage, taxis, passenger cars, rickshaws, etc. One can also apply for a loan to fund two-wheeler purchase for a business.

Artisans and textile workers

It includes craftsmen involved in pottery, cotton ginning, handloom, embroidery, dyeing, fashion designing, etc. who can apply for a loan to fund their business needs. Individuals involved in the manufacture of non-garment textile products and accessories can also apply for a Mudra loan.

Food services sector

Units that preserve agricultural produce and other rural food-manufacturing businesses can opt for a loan under this category.

Agricultural sector

It includes businesses involved in Pisciculture, beekeeping, fisheries, poultry, etc. as well as other agriculture-related industries like clinics, food processing, business centres, etc. 

Machine operator

Individuals involved in operating heavy equipment and machines in sectors like mining, construction or manufacturing can apply under this scheme to avail a loan.

Apart from qualifying for this list, individuals also need to meet the age criteria of 18 to 65 years to avail a loan under the Mudra scheme.

How Can One Apply For This Loan?

You can apply for a loan under the Mudra scheme at any of their nearest financial institutions. An application will be processed and the loan will get sanctioned if the applicant meets the requisite eligibility criteria. 

Nonetheless, given that business owners can also look for alternative options to fund diverse business needs. You can thus easily opt for invoice discounting services to meet your business’s financial requirements, regardless of the avenue towards which it is channelled.

With leading integrated cash flow solutions provider KredX, individuals can easily access collateral-free financing within 24-72 hours* of applying to meet business financing needs.

FAQs on Sources of Mudra Loan:

A. The documents applicants need to submit depend largely on the type of loan applied for. For instance, business proof, trade references, vehicle loan application form, etc. are some of the documents that one may need to submit in addition to standard KYC documents and such.