MUDRA Loan for Startups

As of October 2023, there are 111 unicorn startups in India, with 22 unicorns being added in 2022 alone. This growth reflects a significant expansion in India's startup ecosystem, which has been recognised as the third-largest in the world, with over 112,718 startups registered as of early 2025.

With this phenomenal growth in startups, the Government of India has introduced a few important initiatives to make it easier to conduct business. One such very popular scheme is the MUDRA loan for startups, popularly known as Pradhan Mantri MUDRA Yojana (PMMY).

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, a MUDRA loan for business startups is a great way of fundraising.

The eligibility criteria required for getting a MUDRA loan is as follows:

• You must be a citizen of India 

• You must be between 18 to 65 years of age 

• You must have a good credit history, with no defaults with banks or NBFCs

• Proprietorships, partnership firms, private and public limited companies, and micro & small enterprises can apply

You might need the following documents to apply for the Pradhan Mantri MUDRA Yojana startup loan:

• Identity Proof - PAN Card or Aadhaar Card or Passport

• Latest passport-size photographs

• Documents of the loan taken (if any)

• Credibility Documents include Educational documents and 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)

There are 2 modes of funding available through the program:

1. Micro Credit Scheme offers loans up to ₹1 Lakh through Micro Finance Institutions. Individuals, Joint Liability Groups, and Self-Help Groups can obtain these loans. This is a great option for small businesses that need a moderate amount of funding to get started

2. Refinancing for banks and NBFCs can be a helpful option for businesses that need to finance crucial activities. This is available for Kishore, Tarun, and Shishu loans and can be accessed through regional rural banks, commercial banks, small finance banks, and NBFCs

Applying for the MUDRA scheme for a startup is a simple process. To get started, you first need to determine the category that your startup falls under. Each of these categories cater to specific business requirements. Before applying for the loan, you should understand your requirements and match them with these categories. 

Once you have identified the appropriate category, you can follow the below steps to apply for the MUDRA Yojana for startups:

• Step 1: Visit the official MUDRA loan website https://www.MUDRA.org.in/

• Step 2: Scroll down to the separate sections dedicated to the 3 categories, Shishu, Kishore, and Tarun. Click on the category you want to apply through

• Step 3: Download the application form from the website and fill in all the required details

• Step 4: Once you have filled in the application form, upload all the necessary documents as per the instructions given on the website

• Step 5: After submitting the application and documents, the bank will verify the same. 

• Step 6: Once your application is approved, the bank will authorise the loan amount and transfer it to your bank account

Apart from the official website, you can also visit https://udyamimitra.in/ to apply for the MUDRA loans.