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Learn important features, benefits, eligibility details, and required documents for applying for a MUDRA Shishu loan.
The MUDRA Shishu Loan is one of the loan categories under the Pradhan Mantri Mudra Yojana (PMMY). Enterprises, startups, and individuals running small-scale businesses like shops, service units, or even cottage industries can get loans of up to ₹50,000 to kickstart or expand their operations. You do not have to submit collateral to get the loan, which comes with flexible repayment options.
Some banks may impose an upfront charge according to their internal policies.
However, most waive processing or upfront fees for Shishu loans. The government ensures that Shishu loans are available without processing fees, facilitating easier access to working-capital credit for small businesses and entrepreneurs.
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Interest will be levied according to each bank’s internal policy.
Yet under this government-backed scheme, rates are expected to remain nominal. Scheduled commercial banks, regional rural banks, and cooperative banks seeking refinance from MUDRA must align their lending interest with periodic guidance issued by MUDRA Ltd.
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Based on your chosen loan category, bank policy, your creditworthiness, business earnings and other factors, your repayment period may extend up to five years.
That duration helps you spread out your repayments and manage your financial commitments more comfortably.
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You may opt to apply for the Shishu loan either via an online or offline route. Many banks even support completely digital, paperless application processes to simplify and expedite your submission.
Here is a structured table summarising available information about Shishu Mudra Loan, such as interest rates & charges:
| Parameter | Details / Range | Notes / Comments |
|---|---|---|
Loan category limit |
Up to ₹ 50,000 |
|
Interest rate (typical range) |
8% to 12% p.a. |
Many references indicate that Mudra interest rates (depending on lender, location, borrower profile) fall in this band. |
Waived / nil processing fee |
Yes, for many banks |
For the Shishu category, many banks waive processing / upfront fees to reduce burden on small borrowers. |
Other fees / service charges |
Varies |
Some banks may have documentation / inspection / account-handling / supervision charges as per their service charges schedule. |
Prepayment / foreclosure charges |
Nil (often) |
For small loans under PMMY, many lenders do not levy prepayment charges. |
Collateral / security requirement |
Typically none (for ≤ ₹10 lakh) |
Loans up to ₹10 lakh under PMMY generally do not require collateral for the Shishu, Kishor, Tarun categories. |
Guarantee cover |
Yes, via CGFMU (Credit Guarantee Fund for Micro Units) |
Mudra loans are covered under CGFMU guarantee; borrower pays premium/fee for guarantee cover as per guidelines. |
Margin requirement |
Nil (for very small) or minimal |
For very small loans (especially in Shishu), margin requirement is often nil; for larger ones, margins may apply per bank policy. |
Interest-rate linkage |
Base rate / MCLR / EBLR + spread |
Many lenders link Mudra interest rate to their internal benchmark plus a margin/spread. E.g. some banks use EBLR + 1.75% etc. |
Stamp charges / tax duties |
Applicable |
Some banks charge stamp duty / tax on sanction documents etc. as per state law and bank policy. |
Disclaimer: Interest rates, fees, charges, and terms vary by bank, location, borrower’s credit profile, regulatory changes, and the date of sanction. Always verify applicable rates and charges with the lender directly at the time of application or sanction.
Here are some parameters that you’d have to meet to be eligible for getting a MUDRA Shishu loan:
Here is the list of documents required to apply for a MUDRA Shishu loan:
Identity Proof
Address Proof
You can easily apply for a MUDRA Shishu Loan for your business online by following the below-mentioned steps:
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 get 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.
The MUDRA Shishu Loan scheme is a boon for aspiring entrepreneurs in the country as it gives small loans at affordable interest rates to fulfil any working capital needs. With a MUDRA Shishu 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.
The Shishu category under PMMY allows loans up to ₹50,000.
For Shishu loans (up to ₹50,000), banks typically do not insist on margin (i.e. zero margin).
Once all documents are in order, Shishu loan proposals are processed in about 7 to 10 days.
Yes, existing business-loan borrowers may still apply for a Shishu loan, subject to the lender’s credit assessment, eligibility, and non-default status.
The tenure for the MUDRA Shishu loan can range from 3 years to 5 years, depending on your loan provider.
The interest rates of the MUDRA Shishu 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.
No, Shishu loan borrowers are not required to offer any insurance or security.
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