Mudra Loan Scheme Simplified: Borrow Up To ₹10 Lakh Without Collateral

After coming to power in 2014, the Narendra Modi-led government introduced the Mudra Loan Scheme in 2015 with the aim of supporting small businesses and new entrepreneurs across India. The scheme was designed to encourage self-employment and strengthen grassroots entrepreneurship in both rural and urban areas. A key feature of the Mudra loan scheme is that loans are provided without any collateral, making it easier for individuals with viable business ideas to access formal credit through banks and lending institutions.

What Is The Mudra Loan Scheme

The Mudra loan scheme is meant for individuals who wish to start a new business or expand an existing small enterprise. Under this initiative, the government provides funds to banks and financial institutions, which in turn offer loans to eligible borrowers. These loans are available to entrepreneurs involved in manufacturing, trading, service-related activities and certain agricultural-linked businesses. The focus is on increasing income opportunities and supporting micro and small enterprises that often struggle to obtain traditional loans.

Types Of Loans Available Under Mudra

The scheme offers three different loan categories based on the funding requirement of the business. The first category provides loans of up to Rs 50,000 and is suitable for very small or early-stage businesses. The second category covers loans ranging from Rs 50,000 to Rs 5 lakh, aimed at enterprises looking to stabilise or grow operations. The third category offers loans above Rs 5 lakh and up to Rs 10 lakh, intended for businesses planning larger expansion. These loans are offered at reasonable interest rates, making them accessible for small entrepreneurs.

Who Can Benefit From This Scheme

The Mudra loan scheme is open to a wide range of small business owners. This includes people running small factories, service providers, shopkeepers, vegetable and fruit vendors, restaurant owners and food processing units. Businesses located in villages as well as cities are eligible. The scheme plays an important role in supporting income growth in the manufacturing, business, service and agricultural sectors by offering financial backing without demanding security.

Eligibility Conditions For Applicants

To apply for a Mudra loan, the applicant must be an Indian citizen. There should be no previous record of loan default in the applicant’s name. The business must have been operational for at least three years. Additionally, entrepreneurs between the ages of 24 and 70 years are eligible to apply. These conditions ensure that the loans are provided to individuals with a stable business background and repayment capacity.

How To Apply For A Mudra Loan

Applicants can apply for the Mudra loan through the official Udyami Mitra portal. On the home page, applicants need to select the ‘Apply Now’ option. During the application process, they must specify whether they are a new entrepreneur, already running a business or self-employed. New applicants are required to submit basic details such as name, email address and mobile number, followed by verification through an OTP to complete registration.

Why The Mudra Scheme Matters

The Mudra loan scheme has emerged as an important financial support system for small businesses that lack access to collateral-backed loans. By easing credit availability, the scheme encourages entrepreneurship, promotes self-reliance and helps strengthen the small business ecosystem across India. For many first-time entrepreneurs, it offers a practical path to turn business ideas into sustainable ventures.