Loan for Business

MUDRA loan subsidy: Percentage, amount, details & how to apply online

By Tata Capital
30 September 2026
7 mins read
1941

Many borrowers search for a MUDRA loan subsidy, but the Pradhan Mantri MUDRA Yojana (PMMY) does not provide a direct cash subsidy. Instead, eligible businesses benefit through collateral-free loans, interest subvention on eligible Shishu loans, and access to certain linked government schemes. Understanding these benefits helps you separate facts from common misconceptions. MUDRA loans have four categories: Shishu, Kishor, Tarun, and Tarun Plus. Eligible businesses can apply for these loans through the official “Jansamarth” portal or a partner bank’s or an NBFC’s website.

A MUDRA loan subsidy generally refers to interest relief or benefits available through eligible government schemes alongside a MUDRA loan, rather than a direct cash subsidy under PMMY.

Is there a subsidy on MUDRA loans?

No, there is no direct subsidy on MUDRA loans under the Pradhan Mantri MUDRA Yojana (PMMY). However, borrowers may benefit from interest relief, credit guarantee support, or subsidies available through other government schemes linked to MUDRA loans.

As per the official position on the Pradhan Mantri MUDRA Yojana (PMMY), there is no direct subsidy in MUDRA loans.

In other words, borrowers do not receive a cash grant simply because they have taken a MUDRA loan.

The confusion usually arises because these loans are collateral-free, often come with no processing fee, and may be linked to other government schemes that provide subsidies.

Therefore, when people refer to a MUDRA loan subsidy, they are usually talking about benefits such as interest relief, credit guarantee support, or subsidies available under linked government programs, rather than a direct cash subsidy.

Key Facts About Mudra Financial Support

No Direct Grant: PMMY doesn’t hand out cash. Any relief comes as reduced interest or support through a separate scheme.
Collateral-Free: Every MUDRA loan, regardless of category, is sanctioned without asking you to pledge security.
Linked Schemes: Programs like CLCSS and PMEGP can add a genuine capital subsidy on top of a MUDRA loan, but you have to qualify and apply for them separately.
Past Relief: The 2% Shishu interest subvention was rolled out as a one-time relief measure in 2020 for borrowers who repaid promptly within 12 months, rather than a permanent, always-on benefit.
Alternative Schemes: If you don’t qualify for MUDRA-linked relief, schemes such as Stand-Up India may still offer subsidized interest rates for eligible entrepreneurs.

What is the MUDRA loan subsidy percentage that is actually applied?

No fixed percentage: PMMY guidelines don’t set a single subsidy percentage for MUDRA loans.
2% Shishu subvention: Eligible borrowers under the Shishu category may receive a 2% interest subsidy if they repay their loans within 12 months.
Varies by scheme: Some businesses may also benefit from separate government programs, such as the Credit Linked Capital Subsidy Scheme (CLCSS), which provides a 15% capital subsidy for eligible technology upgrades.

As a result, the MUDRA loan subsidy amount is not the same for every borrower and depends on the scheme for which they qualify.

Note: Government schemes, subsidy rates, and eligibility rules may be revised from time to time. Always check the latest information on the official government portals before making any financial decision.

What are the MUDRA loan amounts and categories?

MUDRA loan category	Loan amount	Eligible businesses
Shishu	Up to Rs. 50,000	Businesses that are just starting or need a small amount of capital.
Kishor	Rs. 50,000 to Rs. 5 lakh	Businesses looking to expand or strengthen operations.
Tarun	Rs. 5 lakh to Rs. 10 lakh	Established businesses with larger funding needs.
Tarun Plus	Rs. 10 lakh to Rs. 20 lakh	Eligible businesses seeking higher funding under the revised PMMY guidelines.

Note that these figures indicate loan limits for each category and not the MUDRA loan subsidy amount. Any eligible interest subvention or benefit under linked schemes is applied to the loan account and is not paid to the borrower as a cash subsidy.

What are the MUDRA loan benefits beyond subsidy?

MUDRA loans are collateral-free. Eligible businesses can avail of funding without pledging their assets.
MUDRA loans come with zero or very nominal processing fees. This helps in reducing the overall borrowing cost.
MUDRA loan interest rates are usually more affordable than those of other unsecured loans.
Eligible loans are covered under the Credit Guarantee Fund for Micro Units (CGFMU), reducing the lender’s credit risk.
Eligible borrowers can receive a 2% interest subvention on Shishu loans under the PM MUDRA loan subsidy.
No Pre-Closure Charges: Most MUDRA loans don’t penalize you for repaying early, so you can close the loan sooner without any extra cost.
MUDRA Card Facility: For working capital needs, some lenders issue a RuPay MUDRA Card linked to your loan account, letting you draw funds as needed rather than as a single lump sum.
Structured Growth Tiers: The Shishu, Kishor, Tarun, and Tarun Plus categories are designed so a business can move to a higher tier as it grows, rather than needing an entirely new loan product.

Linked Government Schemes Offering Subsidy with MUDRA Loans (CLCSS, PMEGP)

There is no direct PM MUDRA Yojana subsidy. However, some government schemes may provide financial support alongside a MUDRA loan.

Credit Linked Capital Subsidy Scheme (CLCSS): Offers up to 15% capital subsidy on loans taken for technology upgradation.
Stand-Up India Scheme: Supports women and SC/ST entrepreneurs through bank loans at subsidized interest rates.
Prime Minister’s Employment Generation Program (PMEGP): Provides substantial capital subsidies ranging from 15% to 35% of the project cost.

Note that these schemes are not included in the MUDRA loan subsidy details. They have their own eligibility conditions and must be applied for separately.

What are the MUDRA loan eligibility criteria?

The applicant must be a resident citizen of India.
The applicant’s age should be 18 years or above at the time of application.
The applicant must be running or planning to start a non-farm income-generating micro-enterprise.
The loan requirement should fall within the applicable MUDRA loan category limit for Shishu, Kishor, Tarun, or Tarun Plus.
No collateral is generally required for eligible MUDRA loans.

How to apply for the MUDRA loan online?

If you’re specifically looking into MUDRA loan subsidy apply online steps, the process itself works just like a regular MUDRA loan application:

Visit the official Jansamarth (jansamarth.in) or Udyami Mitra (udyamimitra.in) portal. You can also apply directly via a partner bank’s or an NBFC’s website.
Check eligibility and choose the appropriate loan category: Shishu, Kishor, Tarun, or Tarun Plus.
Fill out the loan application form by entering your personal and business details.
Upload the required documents one by one. These may include your KYC documents, business registration certificate, and audited financial statements.
Submit your application for further verification. You can monitor the status of your application through the respective portal or lender.

Documents Required for MUDRA Loan Application

KYC documents: Aadhaar, PAN, and address proof for identity verification.
Business proof: Registration certificate, GST registration (if applicable), or Udyam registration for your enterprise.
Financial documents: Audited financial statements, bank statements, and income tax returns, where applicable.

Mistakes to Avoid While Applying for MUDRA Loan

Choosing the wrong loan category: Applying under Shishu when your funding need actually fits Kishor or Tarun, or vice versa, can slow down approval or leave your business under-funded.
Submitting incomplete documents: Missing KYC, business proof, or financial statements is one of the most common reasons applications get delayed or rejected.
Assuming the wrong scheme applies: Treating MUDRA as if it automatically includes a capital subsidy, when that benefit actually comes from a separate scheme like CLCSS or PMEGP that you must apply for on its own.

Conclusion

The details of a MUDRA loan subsidy are often misunderstood. While PMMY does not provide a direct cash subsidy, it does offer benefits such as collateral-free credit, zero or nominal processing fees, and affordable interest rates. Eligible borrowers can also receive a 2% interest subvention on Shishu-category loans.

Always apply through official government portals or authorized lenders. If your business needs funding beyond MUDRA limits, you can also explore Tata Capital Business Loans for higher financing requirements.

FAQs

Is there a subsidy on a MUDRA loan?

Not in the form of a direct cash payment. A MUDRA loan under PMMY is primarily a collateral-free business loan. In some cases, borrowers may become eligible for interest relief or benefits under separate government programs, but these are different from the loan itself and depend on specific eligibility conditions.

What is the MUDRA loan subsidy percentage?

There is no single subsidy percentage that applies to every MUDRA loan. The only commonly discussed benefit is the 2% interest subvention available for eligible Shishu borrowers whenever notified by the government. Other subsidy percentages, if any, belong to separate schemes and not to PMMY itself.

What is the MUDRA loan subsidy amount?

There is no fixed subsidy amount under the MUDRA scheme. The figures you often see - such as ₹50,000 or ₹5 lakh - refer to the loan amount you can borrow under different categories. Any eligible benefit is usually reflected as interest relief or support through another government scheme rather than a cash payout.

What is the 2% interest subsidy on Shishu loans?

The 2% interest subvention is a benefit announced for eligible Shishu loan borrowers under specific government notifications. Instead of receiving money directly, eligible borrowers pay less interest on their loan for the notified period, provided they meet the required conditions, including timely repayment.

Can I get a capital subsidy with a MUDRA loan?

Yes, but only if you qualify under another government scheme that offers capital subsidies. A MUDRA loan by itself does not include this benefit. If your business meets the conditions of a linked program, you may be able to receive both the loan and the subsidy separately.

How do I apply for a MUDRA loan online?

You can begin your application through the Jansamarth portal, Udyami Mitra portal, or the website of a participating bank or NBFC. After filling in your business details and uploading the required documents, submit the application. The lender reviews it and informs you about the next steps.

Is the MUDRA loan application free?

Yes. There is no fee for applying through official government portals or authorized lenders. If any website or individual asks you to pay simply to submit a MUDRA loan application, it is best to avoid them and use only recognized channels.

Is MUDRA loan subsidy real or a myth?

It's neither entirely real nor a total myth. PMMY doesn't hand out a direct cash subsidy, so that specific idea is a myth. But real benefits exist: collateral-free lending, occasional interest subvention on Shishu loans, and access to separate schemes like CLCSS that do offer genuine subsidies.

Can I get subsidy directly in my account?

No. Even where a benefit like the 2% Shishu interest subvention applies, it reduces the interest you owe on the loan rather than being credited to your bank account as cash. Capital subsidies under linked schemes are typically adjusted against the loan account too.

Which scheme gives subsidy with MUDRA loan?

Schemes like the Credit Linked Capital Subsidy Scheme (CLCSS), the Prime Minister's Employment Generation Program (PMEGP), and Stand-Up India can offer subsidies or subsidized rates alongside a MUDRA loan, but each has its own eligibility criteria and a separate application process.

Can I apply for MUDRA loan online?

Yes. You can apply through the Jansamarth portal, the Udyami Mitra portal, or directly on a participating bank's or NBFC's website. Choose your loan category, fill in your business details, upload the required documents, and submit for verification.

What is the interest subsidy on Shishu loans?

The interest subsidy on Shishu loans refers to the 2% rate relief the government has offered in specific notified windows, most notably a 2020 relief measure for prompt repayers. It isn't a permanent feature, so check current government notifications to see if it's active when you apply.

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MUDRA loan subsidy: Percentage, amount, details & how to apply online