MUDRA Loan (PMMY)

MUDRA Loan (Pradhan Mantri MUDRA Yojana, or PMMY) is a government-backed lending programme that provides collateral-free loans to micro and small enterprises through banks, NBFCs, and microfinance institutions. MUDRA — Micro Units Development and Refinance Agency — refinances these lenders; it does not lend directly to businesses.

Who it applies to

• Non-corporate, non-farm micro and small businesses engaged in income-generating activities
• Sole proprietorships, partnerships, LLPs, private limited companies, and self-employed individuals
• Businesses in manufacturing, trading, or services
• No minimum turnover requirement; new businesses can apply

Loans are categorised by size:

What you get

• Collateral-free loan at market rates — the government guarantee removes the need for property or asset security
• MUDRA RuPay card for flexible working capital withdrawal (available on some loan products)
• No processing fee on Shishu and Kishore loans
• Credit history for future borrowing — a clean MUDRA repayment record supports subsequent applications for CGTMSE and bank credit

What most founders miss

MUDRA does not lend directly. You apply at a bank or NBFC branch, not at a MUDRA office. The lending institution does its own credit assessment and can decline the application despite the government backing. "MUDRA loan" is the product name; the bank is the actual lender.

MUDRA and CGTMSE are complementary, not alternatives. CGTMSE provides the credit guarantee to the lender (covering a portion of default risk); MUDRA provides the refinancing mechanism. Many borrowers use both in the same transaction without realising it.

The loan must be for an income-generating business activity. Personal expenses, real estate investment, and agricultural land purchase are explicitly excluded.

See also

• Udyam Registration — having a URN strengthens your MUDRA application at most lenders
• MUDRA Tarun on BenefitStack
• CGTMSE and Stand-Up India — credit options compared