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Features & Benefits of the Mudra Shishu Loan

Shishu loans under the Mudra scheme designed to help small businesses meet their working capital needs. Here are some of the salient features and benefits of the Mudra Shishu loans:

  • Zero processing fee 

Some banks may charge an upfront fee in accordance with their internal guidelines. However, the upfront fee and/or processing charges for Shishu loans are waived off by most Banks.

The government has made it so that the Shishu loan is available without any processing fees to help small businesses and entrepreneurs access credit for their working capital needs without much effort.

  • Affordable interest rates, generally not exceeding 12% p.a.

Interest rates will be charged in accordance with the bank’s policy. However, the interest rates will be nominal as this is a government-backed scheme. RRBs, scheduled commercial banks and cooperative banks that wish to avail of refinance from Mudra will have to peg their interest

rates, in accordance with the advice offered by MUDRA Ltd., periodically.

  • Repayment tenure of 3 to 5 years

Depending on the loan category you choose, bank policies, your creditworthiness, business’ profitability and other features, you can get a repayment tenure of up to five years. This will give you ample time to meet your financial obligations and repay them. 

  • Online as well as in-person application process

Depending on your preference, you can choose to apply for the Shishu loan through the online mechanism or the offline mechanism. Many banks also offer fully digitalised and paperless application processes. 

  • Loan amount of up to ₹50,000

Under the Shishu loan category, you can get a loan of up to ₹50,000 to meet your working capital requirements. 

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Documents & Eligibility Required for Mudra Shishu Loan

1. KYC Documents

  • Identity Proof: PAN card, passport, Aadhaar card, driving licence, Voter’s ID

  • Address Proof: Aadhaar card, bank account statements, Ration card, rent agreement, phone bill, power bill

2. Other Financial Documents

  • Income Proof: Latest salary slips, Income Tax Returns, or Form 16

  • Address proof of the business

  • Registration certificate of the business

  • Proof of business continuity

  • Director Identity Number (DIN) of all the directors of the firm, if applicable

  • Photographs of the applicant(s)/director(s) or all of the partners

  • Income tax returns of the past 2 years

  • Bank statements of the past 12 months

  • Sales records of the current financial year

  • Assets and liabilities statement of the firm

  • Memorandum of Association (MOA) or Articles of Association or the deed of partnership

  • Relevant registrations and permits in the name of the business with the concerned authorities

3. Eligibility Criteria 

Here are some parameters that you’d have to meet to be eligible for availing a Shishu Mudra loan: 

  • If you’re between the ages of 18 and 65. 

  • If you require a loan of up to ₹50,000 to fund your working capital needs. 

  • If you already own a business and are looking to develop or modernise your existing venture, you may take a Shishu Mudra loan. 

  • If you’re an Indian citizen with no criminal records.

  • If you do not have any history of defaulting on loan payments with any other banks 

  • If you’re a micro entrepreneur, you may avail a Shishu Mudra loan. 

  • If you’re a new business owner or startup founder looking to fund your business, you may apply for the Shishu Mudra loan. 

  • If you’re engaged in any of the following sectors, you may avail a Shishu Mudra loan:

    1. Manufacturing sector

    2. Trading and services sector

    3. Allied agricultural services sector

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Application Process for Mudra Shishu Loan

You can easily apply for a Mudra Shishu Loan for your business online by following the below-mentioned steps:

  • Step 1: Visit the Udyami Mitra website at https://udyamimitra.in/ and click on “Apply Now”.

  • Step 2: Enter name, email address and mobile number at the bottom of the page and click on “Generate OTP”. Now enter the OTP received and complete the process by clicking on the ‘Verify OTP’ button.

  • Step 3: Fill in all personal and professional details on the following page and click on the “Apply Now” button under “Loan Application Center”.

  • Step 4: Select ‘Shishu’ to apply for a Shishu Loan.

  • Step 5: Now, you need to enter a few details about your business such as background information of the proprietors and directors of the firm, future working capital estimate, lender of preference, etc.

  • Step 6: Once the above information has been filled in, click on the ‘Submit’ button. Finally, you will be taken to a declaration page. Tick the appropriate checkbox to continue and complete the application process.


Once you complete your Mudra Shishu Loan application process, a success message with the loan application number will be displayed on the screen. Note the reference number for future correspondence.


Alternatively, you can also apply for the Shishu loan offline by visiting your nearest branch of the bank you wish to avail the Mudra Shishu loan from. All you need to do is obtain the Mudra loan application form from a bank official, fill in all the requisite details in the form and attach all the relevant documents and submit the same to the bank official. Once all your documents are verified, your loan shall be approved and the amount shall be disbursed to your bank account.

Interest Subvention Scheme for Mudra Shishu Loans Under PMMY

Under the Atma Nirbhar Bharat Package, the Government of India announced the ”Interest Subvention Scheme for MUDRA – Shishu Loans” in May 2020 with an objective to help small businesses mitigate the impact of the COVID-19 pandemic. Under this scheme, Mudra Shishu Loan beneficiaries were provided an interest subsidy of 2% for a period of 12 months.


The Mudra Shishu Loan scheme is a boon for aspiring entrepreneurs in the country as you can easily avail small loans at affordable interest rates to fulfil their working capital needs. With a Shishu Mudra loan, you can get a credit of up to ₹50,000 to fund your working capital needs. Once you expand the business to higher levels, you can also consider Kishore and Tarun loans under the Mudra scheme which offer higher loan amounts and are aimed towards bigger and more established business enterprises.

FAQs for Mudra Shishu Loan

What is the tenure of Mudra Shishu loan?

The tenure for the Shishu Mudra loan can range from 3 years to 5 years, depending on your loan provider.

What is Shishu in Mudra loan?

Shishu loan category under the Mudra loans are designed to help small businesses meet their working capital needs by offering them unsecured loans of up to ₹50,000.

Who is eligible for a Shishu loan?

Indians citizens between the ages of 18 and 65, with no criminal records or defaulting history are generally eligible for the Shishu loan. This can, however, vary depending on your loan provider.

What is the age limit for a Shishu loan?

Small business owners between the ages of 18 and 65 are eligible for the Shishu Mudra loan.

What is the interest rate of a Shishu loan?

The interest rates of the Shishu Mudra loans can vary depending on your loan provider and your creditworthiness. However, since this is a government-backed loan scheme, the interest rates will be nominal.

Is insurance mandatory for Shishu Mudra loan?

No, Shishu loan borrowers are not required to offer any insurance or security.

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