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Tata Capital > Blog > Loan for Business > Tarun Mudra Loan: Scheme Details, Eligibility & How to Apply

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Tarun Mudra Loan: Scheme Details, Eligibility & How to Apply

Tarun Mudra Loan: Scheme Details, Eligibility & How to Apply

The Tarun Mudra Loan under the Pradhan Mantri MUDRA Yojana (PMMY) might offer a viable financing option for entrepreneurs looking to borrow funds.

The Micro Units Development and Refinance Agency (MUDRA) is a refinancing institution primarily focused on loan extension. Originally established as a wholly-owned subsidiary of SIDBI (Small Industries Development Bank of India), MUDRA commenced operations as a refinancing company with a paid-up capital of ₹750 crore and an authorised capital of ₹1,000 crore.

Here, we discuss what is a Tarun Mudra Loan, applying online procedures, and more.

What is Tarun Mudra Loan Under PMMY?

The Tarun category under the Pradhan Mantri Mudra Yojana (PMMY) is designed to provide financial assistance to small entrepreneurs who require higher loan amounts to expand their businesses. Tarun loans are offered to entrepreneurs who need loans amounting between Rs 5 lakh and Rs 10 lakh.

As of March 2023, a staggering Rs 4.51 lakh crore has been disbursed to 7 million borrowers under the PM Mudra Yojana Tarun loan.

Tarun Mudra Loan Eligibility Criteria

The business loans provided under the Mudra Tarun scheme can be utilised for various purposes, such as purchasing machinery, equipment, raw materials, inventory, working capital, and business expansion activities.

Tarun Mudra Loan: Who Can Apply and What’s Covered?

  1. Age:

Individuals aged between 18 to 65 years are eligible.

  1. New and existing MSME units:

Both new ventures and Ministry of Micro, Small, and Medium Enterprises (MSME) units qualify.

  1. Coverage:

Various sectors benefit, particularly the non-corporate micro-industry, a significant contributor to income generation and employment in India.

  1. Eligible purposes:

Add the blow content in listicle format.

  1. Working capital: Loans cater to both fixed asset procurement and working capital needs, with the option to utilise the Mudra Card for operational expenses.
  1. Transport vehicles: Commercial vehicles like three-wheelers, auto-rickshaws, and others qualify.
  1. Equipment and machinery: Necessary for micro-enterprises.
  1. Agricultural activities: Including poultry, fishing, dairy, agri-clinics, etc.
  1. Trades and small businesses: Small business loans extend to traders, vendors, shopkeepers, and other small business owners.
  1. Food products sector: Covers activities like jelly or jam making, small bakeries, snacks, pickles, etc.
  1. Textile producers and traders: Khaki, wool, silk, handicrafts businesses, etc.

8. Community businesses: Gyms, parlours, boutiques, bookshops, printing shops, mobile repair shops, etc., are also eligible.

Tarun Mudra Loan Interest Rate & Charges

Interest rates for Tarun loan yojana are generally competitive and are decided by the lending institutions. These rates vary based on the applicant’s creditworthiness, collateral offered (if any), and prevailing market conditions.

Tarun Mudra Loan Limit, Repayment & Processing Fees

Borrowers under the scheme have a maximum period of 7 years to repay the loan, which includes a possible moratorium period of up to 12 months. The processing fee for the loans is 0.50% of the loan amount, plus applicable taxes.

Collateral Requirements for Tarun Mudra Loan

The scheme encourages collateral-free loans for loan amounts to promote accessibility to budding entrepreneurs who may lack tangible assets to pledge as security. However, additional documentation would be required, depending on the borrower’s loan amount and credit profile.

Tarun Mudra Loan: Margin Requirement

The term “margin” is the percentage of the total project cost the borrower needs to contribute from their funds, while the remaining amount is financed through the MUDRA loan.

For a Tarun category loan, a margin of 25% is set. This means the borrower needs to contribute 25% of the total project cost, and the Mudra loan covers the remaining 75%.

How to Apply for Tarun Mudra Loan (Offline & Online)

Entrepreneurs interested in availing of Tarun loans can apply through various financial institutions participating in the PMMY scheme, including scheduled commercial financial institutions, regional rural financial institutions, cooperative financial institutions, microfinance institutions (MFIs), and non-banking financial companies (NBFCs).

The application process typically involves submitting relevant documents related to the business, financial statements, KYC (Know Your Customer) records, and business plans, among others.


Also,read: Mudra Loan Apply Online & Offline: Complete Application Process

Tarun Mudra Loan Apply Online: Step-by-Step Guide

Add the below content in listicle format.

1. Visit the official website of the preferred lender and download the application form for the Mudra Tarun Loan.

2. Fill in the required details, including KYC information such as an Aadhaar card and voter’s ID.

3. Provide comprehensive business details, including purpose, income tax, and sales-related information.

4. Choose the needed loan amount and repayment tenure.

5. Review the loan terms and agreement carefully before submitting the application.

6. The financial institution will review and approve the application if the eligibility requirements are met.

Documents Required for Tarun Mudra Loan

Add the below content in listicle format.

  1. Duly-filled Mudra scheme application form
  1. Loan application form of the lending institution
  1. Proof of identity and residence
  1. Proof of business existence, ownership, and continuity
  1. Balance sheet for the last two years and estimated balance sheet for the next financial year or loan tenure
  1. Income tax returns and sales tax statement
  1. Bank account statements and trade references
  1. Record of sales made in the current financial year
  1. Caste certificate for OBCs, SCs, and STs (if applicable)
  1. A well-documented business plan

Also,read: Mudra Business Loan: How to Apply, Eligibility & Documents  

Benefits of Tarun Mudra Loan Scheme for Small Businesses

Here are some key benefits of the Tarun Mudra Loan Scheme for small businesses:

  • Higher funding access: The Mudra Tarun scheme supports growing enterprises with larger loan limits to meet expansion and working capital needs.
  • Collateral free credit: Lenders offer unsecured funding, reducing asset related pressure on small business owners.
  • Affordable borrowing: A competitive Tarun loan interest rate helps businesses manage repayments while maintaining healthy cash flows.
  • Flexible repayment: Structured tenures allow repayments to align with business income cycles.
  • Simple application: Easy eligibility norms make Tarun loan apply processes faster and encourage formal credit adoption.

Tarun Mudra Loan vs Shishu & Kishore: Key Differences

Under the Mudra loan scheme, Shishu caters to new entrepreneurs with loans up to ₹50,000, ideal for early stage businesses needing seed capital, while Kishore supports growing enterprises seeking funds between ₹50,001 and ₹5 lakh. Tarun steps in for more established ventures needing larger funds from ₹5 lakh to ₹10 lakh, making the Mudra Tarun scheme suitable for scaling operations and major investments. 

The Tarun Mudra loan typically involves higher loan amounts and may have longer repayment options compared with Shishu and Kishore, reflecting the greater financial maturity of borrowers it targets. 

Each category helps businesses at different growth phases access tailored financing through lenders without collateral.

Common Reasons for Tarun Mudra Loan Rejection and How to Avoid Them

  • Incomplete documentation: Missing or incorrect documents required for Tarun Mudra loan such as KYC, bank statements, or business proof often lead to rejection. Submitting a verified and complete set improves approval chances.
  • Weak credit profile: Poor repayment history or low credit scores can raise concerns for the Lender. Maintaining timely repayments and low existing liabilities helps build trust.
  • Unclear business viability: Inconsistent income or vague business plans may affect decisions. Present clear financial records before you Tarun loan apply.

Conclusion

It’s important for potential borrowers to thoroughly understand the terms and conditions associated with the Tarun loan yojana to ensure successful utilisation and timely repayment. Additionally, consult financial advisors or experts for guidance tailored to your business requirements and financial goals.

Are you looking for a reliable financing partner for your small enterprise? Tata Capital MSME loans offer attractive interest rates and flexible repayment options, so you can focus on expanding your business without worrying about financial constraints.

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FAQs

What is the Tarun Mudra loan limit and who can apply?

The loan offers funding from ₹5 lakh to ₹10 lakh for MSMEs, traders, and service providers meeting basic business continuity and income criteria set by the Lender.

What is the minimum CIBIL score for Tarun Mudra loan approval?

There is no fixed score, but a healthy credit profile improves approval chances, especially under the Tarun Loan scheme, as Lenders assess overall repayment behaviour.

How do Tarun Mudra loan interest rates compare to regular business loans?

Interest rates are generally competitive and often lower than unsecured business loans, as the scheme is government backed and aimed at supporting MSME growth.

What documents are needed for applying to the Tarun Mudra loan scheme?

Applicants must submit KYC, business proof, bank statements, and income details to help the Lender evaluate stability and repayment capacity accurately.

Is collateral required for a Tarun Mudra loan?

No, collateral is not required, making the Tarun Yojana loan suitable for small businesses without assets to pledge as security.

What is the age limit for Tarun Mudra loan applicants?

Applicants must be at least 18 years old, with the maximum age aligned to the Lender’s loan maturity norms.

Can new businesses avail the Tarun Mudra loan?

New businesses may apply if they demonstrate operational readiness, viable cash flows, and meet Mudra Tarun loan eligibility criteria defined by the Lender.

What are the most common reasons for Tarun Mudra loan rejection?

Incomplete documents, weak credit history, inconsistent income, or unclear business details are common reasons that may lead the Lender to reject applications.

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