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In the year 2021, 44 Indian startups achieved the status of Unicorn Start-Ups. After the United States and China, India is the world’s largest startup ecosystem. As per the Economic Survey 2021-2022, India saw more than 61,400 recognised startups, which is rather incredible. Over the past few years, with the phenomenal growth in startups, the Government of India has introduced a few important initiatives to make ‘doing business’ in India easier and simpler. One such very popular scheme has been the MUDRA loan for startups.

Proposed in 2015-16 by the then Finance Minister Shri Arun Jaitley, the Micro Units Development Refinance Agency was introduced by Prime Minister Shri Narendra Modi on April 8, 2015. A big help for budding entrepreneurs, Mudra loan for startup businesses, is a great way of fundraising. It helps give them the much-needed funding to build their business as well as scale it up.

Features of a Startup Mudra loan

  • Mudra loan eligibility for a startup requires you to be between 18 to 65 years of age.

  • This is an easy loan for traders, shopkeepers, vendors etc. and can be used for various needs.

  • You can also take a loan for transport vehicles.

  • There is no need for any collateral/ third-party security.

  • Entrepreneurs from urban as well as rural areas can benefit from these services.

Types of Mudra Loan for Startup Business

The Pradhan Mantri Mudra Yojna for startups offer loans to small and medium businesses through non-banking financial companies. Depending on Mudra loan eligibility for startups, you can opt for a loan amount up to INR 10 Lakhs. Let us take a look at the three types of Mudra loans for a startup business:


  • Shishu - Most suitable for startups in their teething stage, the Shishu Mudra loan amount can go up to INR 50,000. The Shishu loan can help in meeting the initial capital costs of building infrastructure, setting up the business or purchasing machinery/ raw materials.

  • Kishore - Post the initial setting-up of your business; you need to expand it and help it grow further. The Kishore Mudra loan covers loans between INR 50,000 to INR 5 Lakhs.

  • Tarun - Under the Tarun loan scheme, you can get a loan amount between INR 5 Lakhs to INR 10 Lakhs. If you are an established startup, this amount can be very helpful in expanding it further.

Documents Required to Apply for Mudra Loan for Startups

Listed below are the documents required to apply for Mudra yojana for startups


  • Proof of Identity - PAN Card/ Aadhaar Card/ Passport

  • Passport Sized latest photographs

  • Previous loan documents, if any

  • Credibility Documents - Educational documents, past bank account statements

  • Well-Explained business plan

  • Balance Sheet of your business (Only for Kishore and Tarun loans)

  • Plan of Future Growth (Only for Kishore and Tarun loans)

How to Avail Mudra Loan for Startups

The procedure to apply for the Mudra scheme for startups is fairly simple and straightforward. As a startup venture, you first need to be aware of the category you fall into. You should be able to understand your position and requirement and match the mentioned criteria for each loan category. Once this is done, you can follow the given steps to apply for the Mudra Yojana for startups. Keep in mind that a few steps may differ depending on your particular bank.


  • Step 1: Visit https://www.mudra.org.in/, the official website.

  • Step 2: Download the Application Form and fill it in. you will have to enter your personal and KYC details.

  • Step 3: The required documents have to be uploaded along with the application form.

  • Step 4: Your bank will then verify the paperwork and authorise the loan. The loan amount will soon reflect in your bank account.

What Business Activities are Mudra Loans for Startups Used For?

Let us take a look at the business activities that entrepreneurs can use Mudra loan for startups:


  • Small traders and shopkeepers

  • Agriculture based business -Food processing, poultry, livestock rearing, fishery, auxiliary services

  • Textile business - Power loom, handloom, printing, embroidery

  • Small businesses - Boutiques, beauty parlours, gyms, repair shops, medicine shops, tailor store

  • Producing and selling food items - Food stalls, sweet stores, confectioners, caterers

How Does Pradhan Mantri Mudra Yojana Provide Funds to Startups

To understand more about the Mudra loan for a startup business, let us see how the Pradhan Mantri Mudra Yojana provides the needed funds. The modes of funding are as follows:


  • Micro Credit Scheme - Under the Micro Credit Scheme, loans up to INR 1 Lakh through Micro Finance Institutions for small businesses through:

  1. Individuals

  2. Joint Liability Groups

  3. Self Help Groups

  • Refinancing for Banks and NBFCs - Under the Pradhan Mantri Mudra Yojana, the following can refinance crucial business activities under Kishore, Tarun and Shishu loans.

  1. Regional rural banks

  2. Commercial banks

  3. Small finance banks

  4. NBFCs

Extended for income generation, Mudra loan serves a variety of purposes. Traders, vendors, and shopkeepers can get a business loan and a working capital loan through Mudra Cards. A boon to many small/ medium business owners, the Pradhan Mantri Mudra loan for startups is benefitting a big section of budding and established entrepreneurs.