Get Up To ₹20 Lakh Government Business Loan Without Any Collateral; Know The Process

Pradhan Mantri Mudra Yojana : In a major push to encourage entrepreneurship, the government has enhanced the loan ceiling under the Pradhan Mantri Mudra Yojana. Initially launched in 2015 to support non-corporate and non-agricultural small businesses, the scheme now offers Mudra loan up to 20 lakh without any collateral or guarantee.

The revision comes after the scheme’s growing popularity across the country. Until recently, the maximum loan amount was ₹10 lakh. Following the latest budget announcement for the financial year 2024–25, the cap has been doubled, allowing aspiring business owners to secure larger funding support.

Since its launch, more than 52 crore loans worth over ₹33 lakh crore have reportedly been sanctioned, reflecting strong uptake among small entrepreneurs.

Four Categories Of Loans Explained

Under the Pradhan Mantri Mudra Yojana, loans are structured into four categories based on the scale of business needs.

Shishu loans cover amounts up to ₹50,000 and are typically meant for early-stage micro ventures.

Kishore loans range from ₹50,000 to ₹5 lakh and cater to businesses seeking expansion or additional working capital.

Tarun loans provide funding between ₹5 lakh and ₹10 lakh for more established enterprises.

With the latest enhancement, the Tarun Plus loan category now allows borrowers to access funds between ₹10 lakh and ₹20 lakh, offering substantial support for scaling operations.

This tiered structure ensures that businesses at different stages of growth can access appropriate financial backing.

Key Features Of The Scheme

One of the biggest attractions of this small business government scheme is that it offers collateral free business loan facilities. Applicants are not required to pledge property or provide third-party guarantees.

There is no processing fee charged under the scheme, which reduces the initial financial burden. The interest rate generally ranges between 9% and 15% per annum, depending on the lending institution’s benchmark rates.

Repayment tenure typically varies between three and seven years, giving borrowers adequate time to stabilise and grow their enterprises.

To qualify under Mudra loan eligibility norms, applicants must be Indian citizens above 18 years of age. They should have a viable business plan and a stable source of income linked to their enterprise.

Who Provides The Loan

Loans under this initiative are extended by commercial banks, regional rural banks and small finance banks. In addition, selected non-banking financial institutions and microfinance organisations also participate in disbursing funds.

The scheme is particularly targeted at micro and small entrepreneurs who may otherwise struggle to secure formal credit. Start-ups, small traders, service providers and self-employed individuals can benefit significantly from the expanded limit.

Application Process And Required Documents

Applicants can apply online through the official portal of the scheme. The process involves filling in personal and business details. Once the application is reviewed and found eligible, the borrower must approach the chosen bank to complete further formalities.

Documents typically required include Aadhaar card, PAN card, proof of residence, passport-sized photographs, income proof, business plan and other KYC documents.

With the loan ceiling now raised to ₹20 lakh, the Pradhan Mantri Mudra Yojana offers a stronger financial foundation for those looking to establish or expand their ventures. For individuals determined to build their own enterprise but constrained by limited capital, the enhanced Mudra framework provides a structured and accessible route to funding.