Loan for Business

Mudra loan eligibility criteria: Age limit, documents & who can apply

By Tata Capital
14 July 2026
11 mins read
2006

The Pradhan Mantri MUDRA Yojana (PMMY) provides collateral-free loans to micro and small businesses through the Shishu, Kishor, and Tarun categories. To qualify, applicants must meet the prescribed age, business, and documentation requirements laid down by the lender. The scheme is available to eligible entrepreneurs across sectors, including self-employed individuals, shopkeepers, artisans, manufacturers, and service providers. Interest rates and repayment terms vary from one lender to another, while the application can be completed either offline or online. Understanding the eligibility conditions, required documents, and common rejection reasons can help applicants prepare a stronger loan application.

A Mudra Loan is a government-backed, collateral-free business loan that helps micro and small businesses meet their financing needs.

Starting a new business often requires substantial capital investment. To support the entrepreneurial journey of micro and small business owners, the Indian government introduced the Pradhan Mantri MUDRA Yojana (PMMY) in 2015. It offers micro-credit without collateral, security, or third-party guarantee, allowing business owners to fuel their ventures seamlessly. Mudra full form is Micro Units Development and Refinance Agency.

Under this scheme, small businesses and entrepreneurs can secure a loan up to Rs, 10 lakhs. However, to avail of the loan, borrowers must meet the Mudra Yojana loan eligibility criteria depending on the loan category.

In this article, we’ll explore the different loan categories under the PMMY scheme and their eligibility criteria.

What are the types of Mudra loan schemes in India?

The MUDRA loan products are categorized into three segments, each serving different financing needs:

Shishu (Up to ₹50,000)

This category offers loans with a maximum limit of Rs. 50,000 and is specifically designed for start-ups and individual entrepreneurs seeking smaller amounts to kickstart their businesses.

Kishor (₹50,001 to ₹5 lakhs)

The Kishore segment provides loans ranging from Rs. 50,001 to Rs. 5 lakhs and caters to the capital needs of upcoming or existing businesses looking to expand their operations.

Tarun (₹5,00,001 to ₹10 lakhs)

Tarun loans range from Rs. 5,00,001 to Rs. 10 lakhs, targeting already established businesses that require higher amounts to manage their cash flow, scale their activities, or meet larger business requirements.

What is the purpose of Mudra loans?

MUDRA loans serve a wide range of purposes for businesses, providing financial support across various sectors:

Small-scale business loans – MUDRA loans cater to shopkeepers, vendors, traders, and individuals engaged in trading activities.
Equipment financing – Businesses in small-scale industries can utilize MUDRA loans to finance the acquisition of machinery, tools, technology, and other equipment.
Transport vehicle loans – MUDRA loans offer financing options for transport vehicles such as trucks, vans, buses, taxis, auto-rickshaws, and other commercial vehicles.
Working capital support – MUDRA loans provide working capital to businesses across sectors.
Food-related sectors – Businesses involved in food-related sectors such as agriculture, animal husbandry, horticulture, aquaculture, and beekeeping can avail of MUDRA loans.
Commercial vehicles – People using tractors, tillers, two-wheelers, or other vehicles for commercial purposes can avail of the MUDRA loan.

What are the eligibility criteria for the Mudra loan scheme?

To be eligible for a Mudra Loan, borrowers must meet the following criteria:

Mudra Loan Age Limit (18 to 65 Years)

The Mudra Loan age eligibility ranges from 18 years up to 65 years. Applicants must fall within this age bracket to be eligible for Mudra loan.

Indian citizenship

The applicant must be an Indian citizen to qualify for a MUDRA loan.

Business ownership

Individuals applying for the loan should own a micro, small-scale, or start-up business. This includes businesses in sectors like retail, manufacturing, services, trading, and agriculture.

Category

While advantageous for SC, ST, or OBC categories, Mudra Yojna Loan eligibility is not exclusive to these groups. Its eligibility extends to individuals from diverse backgrounds.

Good credit history

Having a good credit history, which reflects responsible borrowing and timely repayment of loans, is crucial for Mudra Yojna Loan eligibility.

Maximum loan amount

Under the Mudra loan, borrowers can secure a maximum amount of Rs. 10 lakhs to fund different aspects of their operations.

Required documents

Applicants must produce all essential documents for loan processing, including business registration papers, identity and address proof, income and bank statements, project reports, and any pertinent certificates or permits.

Eligible entities

A Mudra loan can be availed by proprietorship/partnership firms engaged in the following business activities:

Shopkeeping
Machine operators
Small manufacturers and vendors
Fruits and vegetables seller
Repair shops
Truck operator
Machine operators
Artisans
Livestock and poultry, etc.

Mudra loan age limit & category-wise eligibility table

The applicant must be at least 18 years old, while the maximum age is usually 65 years, or the loan maturity age set by the Lender.

The table below explains category-wise eligibility clearly:

Category	Loan Range	Eligibility
Shishu	Up to ₹50,000	Individuals or micro units with simple business plan, meeting Mudra loan criteria
Kishor	₹50,001 to ₹5,00,000	Growing small businesses with income stability
Tarun	₹5,00,001 to ₹10,00,000	Established small enterprises with viability plan

This table reflects core Mudra loan details based on standard PMMY guidelines and lender norms.

What is the eligibility for special categories (women, SC/ST, differently-abled)?

The PM Mudra Loan scheme is open to eligible applicants from all sections of society, including women entrepreneurs, SC/ST applicants, differently-abled individuals, and members of other priority groups. There are no separate eligibility rules or different age criteria for these categories. The standard Mudra loan age eligibility and business eligibility conditions continue to apply.

However, many banks and financial institutions actively encourage applications from these groups and may organize special outreach programs or offer support during the application process. Applicants must still meet the lender’s requirements regarding the business activity, repayment capacity, and documentation needed for loan approval.

Which lending institutions are eligible for Mudra loans?

The Pradhan Mantri MUDRA Yojana (PMMY) has authorized several types of lending institutions to offer MUDRA loans, ensuring accessibility and availability of credit to a wide range of businesses and entrepreneurs. These lending institutions include:

Non-Banking Financial Companies (NBFC)

NBFCs are eligible to offer MUDRA loans, extending credit facilities to micro and small businesses based on their financial viability and creditworthiness.

Public and private sector banks

Both public and private sector banks are authorized to provide MUDRA loans.

Micro-Finance Institutions (MFI)

MFIs are an integral part of the MUDRA loan ecosystem, serving as key intermediaries in reaching out to underserved segments of the population.

Regional Rural Banks (RRB)

RRBs are financial institutions established to cater to the banking needs of rural areas and promote rural development. They are authorized to offer MUDRA loans, facilitating access to credit for rural entrepreneurs, farmers, and small businesses.

Small Finance Banks (SFB)

SFBs play a vital role in extending MUDRA loans to individuals and businesses in need of financial support.

For lending institutions to be eligible to offer MUDRA loans, they must meet specific criteria set by the PMMY. These include:

Profit generation requirement

The lending institution, whether it’s a bank or a non-banking financial company (NBFC), must have generated profits in the last two consecutive financial years.

Net Performing Assets (NPA) limits

The net performing assets of Public Sector Banks should not exceed more than 15% of their total assets. Private sector banks are required to maintain their net performing assets below 10% of their total assets. RRBs should keep their net performing assets below 6% of their total assets.

Net worth requirement

The net worth of private and public sector banks should be above Rs. 250 crores. Rural banks must have a net worth above Rs. 50 crores.

A total of 27 public sector banks, 31 regional rural banks, 17 private sector banks, 36 micro-finance institutions, 25 non-banking financial institutions, and 4 cooperative banks have been chosen to offer MUDRA loans. These lending institutions play a crucial role in supporting micro and small businesses across various sectors by providing accessible and affordable credit.

What are the documents required for a Mudra loan application?

You must submit certain documents to prove your Mudra loan eligibility. The documents required may vary depending on the lender and the type of Mudra loan scheme. Shishu loans require minimal documentation as they are designed for startups and entail lower loan amounts. On the other hand, Kishor and Tarun loans require extensive business and financial documents.

Documents required for Shishu loans:

Proof of identity: Aadhaar card, PAN card, Voter’s ID card, Driver’s license, or Passport.
Proof of address: Aadhaar card, Passport, recent electricity or telephone bills, bank passbook, rent agreement, or property tax receipts.
Business documents: Registration certificate, trade license, etc.
Quotation of machinery and items to be purchased.
Details of the supplier.
Proof of category, such as SC/ST/OBC.
Recent passport-sized photographs.

Documents required for Kishor and Tarun loans:

Proof of identity: Aadhaar card, PAN card, Voter’s ID card, Driver’s license, or Passport.
Proof of address: Aadhaar card, Passport, recent electricity or telephone bills, bank passbook, rent agreement, or property tax receipts.
Business documents: Registration certificate, trade license, etc.
Creditworthiness declaration.
A detailed project report highlighting the technical and economic viability.
Bank statements.
Last two years’ balance sheets.
Proof of category, such as SC/ST/OBC.
Recent passport-sized photographs.

What are the Mudra loan interest rates and repayment terms?

There is no fixed interest rate for the PM Mudra loan. The applicable rate may depend on the lending institution, the Mudra loan category, the borrower’s credit profile, and the prevailing market conditions. That being said, it’s important to note that Mudra loan interest rates are typically competitive as compared to those of regular term loans. Apart from the interest rate, a processing fee of 0.5% of the loan amount is levied.

Similarly, the repayment period also varies from one lender to another and depends on the nature and purpose of the loan. Borrowers typically have a maximum period of seven years to repay the loan, which also includes a potential moratorium period of up to 12 months. Before applying, it is advisable to compare the interest rates, repayment tenure, and other loan terms offered by different lenders.

What is the Mudra loan application process offline?

Eligible beneficiaries can apply for Mudra loans both offline and online. To apply offline, they may visit the nearest branch of a bank, NBFC (Non-banking financial company), microfinance institution, or any other authorized Mudra loan lender. At the branch, the applicant can fill out a Mudra loan application form and attach the required documents. The lender will then verify the application before providing an approval.

How to check mudra loan eligibility & apply online (Stepwise guide)?

Here is a simple step-by-step guide to help you check eligibility and complete the Mudra loan online apply process with ease.

Step 1: Visit the official Lender website or authorized portal to review Mudra loan eligibility based on business type and funding needs.

Step 2: Check that you meet the Mudra loan age limit, which starts at 18 years and extends to the loan maturity age set by the Lender.

Step 3: Select the appropriate category Shishu Kishor or Tarun as per your requirement.

Step 4: Fill in personal and business details accurately and upload KYC documents.

Step 5: Submit the application online and track the status using the reference number.

What are the common mudra loan rejection reasons & how to improve eligibility?

Here are some common reasons for Mudra loan rejection:

Incomplete documents: Missing or incorrect KYC or business proofs often lead to rejection, so ensure accuracy before submission.
Weak business viability: Poor cash flow clarity reduces confidence, strengthen projections and business plans.
Credit issues: Past defaults or no credit history signal risk, maintain disciplined repayments.
Eligibility gaps: Not meeting Mudra loan eligibility age or activity norms affects approval.
High liabilities: Excess debt impacts repayment ability, lower exposure.

How to improve eligibility: Prepare complete documentation, register your business on Udyam/MSME, refine your business plan, and maintain healthy financial records to enhance approval chances.

Conclusion

The PMMY provides businesses with collateral-free loans, making it easier for them to obtain credit.

However, if you are not eligible for a Mudra Loan, you can apply for a small business loan with Tata Capital. For business owners in need of funding, Tata Capital provides an excellent alternative with its reasonable interest rates and flexible repayment plans.

Visit the Tata Capital website or download the mobile app to learn more.

Apply for a Business Loan

FAQs

What is the age limit for Mudra loan eligibility in India?

Applicants must be at least 18 years old, with the upper age usually capped at 65 years, as per Mudra loan age limit guidelines set by the lender.

Who is eligible for Mudra loan under the Pradhan Mantri Mudra Yojana scheme?

Indian citizens operating non farm micro enterprises in manufacturing, trading or services with a viable plan qualify under standard Mudra loan criteria.

Can students or women entrepreneurs apply for Mudra loan?

Yes, students with a genuine business proposal and women entrepreneurs owning or planning micro enterprises can apply, subject to meeting lender eligibility and documentation norms.

What documents are required for Mudra loan eligibility check and application?

Applicants usually submit identity proof, address proof, photographs, business proof, quotations, and bank statements, as required by the Lender for assessment.

What disqualifies an applicant from Mudra loan eligibility criteria?

Loan defaults, unclear business purpose, incorrect documents, or activities outside approved non farm sectors can lead to rejection by the lender.

How can applicants improve their chances of Mudra loan approval?

Applicants should prepare a clear business plan, maintain clean credit behaviour, submit accurate documents, and select the correct Mudra category.

Which banks and NBFCs are authorized to offer Mudra loans?

Public and private sector Lender institutions, regional rural lenders, small finance lenders, and RBI authorised NBFCs are permitted to offer Mudra loans.

What is the maximum loan tenure and repayment for Mudra scheme loans?

Based on Mudra loan details, repayment tenure can extend up to five to seven years, depending on the loan category and the Lender’s internal policy.

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