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Shishu MUDRA Loan

Learn important features, benefits, eligibility details, and required documents for applying for a MUDRA Shishu loan.

What is a 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.

Features & Benefits of Shishu MUDRA Loan

Zero processing fee

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

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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Repayment period of 3 to 5 years

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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Online as well as in-person application process

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.

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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Shishu Mudra Loan Interest Rates & Charges

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

“Shishu” covers loans ≤ ₹50,000 under PMMY scheme

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.

Eligibility Criteria & Documents Required for Shishu Mudra Loan

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

  • If you are between the age 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 MUDRA Shishu 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 or business owner or startup founder looking to fund your business
  • If you’re engaged in any of the following sectors:
    1. Manufacturing sector
    2. Trading and services sector
    3. Allied agricultural services sector

Here is the list of documents required to apply for a 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. Miscellaneous 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 in 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), Articles of Association, or partnership deed
  • Permits and registrations issued in the business’s name with relevant governmental authorities

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 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 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.

Conclusion

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.

Other Mudra Loans Types

FAQs for MUDRA Shishu Loan

What is the maximum amount of Shishu Mudra loan?

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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