Tarun MUDRA Loan

Under the PMMY scheme, banks, NBFCs, and MFIs provide collateral-free financial assistance to MSMEs through three products, including Shishu, Kishore, and Tarun.

Among them, Tarun loans provide maximum amounts as term or working capital loans. Read on to learn more about its features, the documents you require at the time of application, and more.

The Tarun MUDRA Loan is a part of the Pradhan Mantri MUDRA Yojana (PMMY), aimed at helping small businesses grow by providing financial assistance. This loan is specifically designed for entrepreneurs who need funding between ₹5 Lakhs and ₹10 Lakhs to expand their existing businesses.

It benefits small enterprises, retailers, and service providers who want to scale up operations, purchase equipment, or meet working capital needs. The Tarun MUDRA Loan is an accessible and affordable way for you to enhance your business operations without the need for collateral. Under this scheme, lending institutions generally provide preference to businesses operating in sectors like food products, textiles, agriculture-allied services, etc.

Here are some of the notable characteristics of the Tarun Mudra loan, with their corresponding benefits, provided under the MUDRA scheme:

High Loan Amount

The loan amount available under this product ranges between ₹5 Lakhs and ₹10 Lakhs.

Benefit: Access to substantial funding ranging from ₹5 Lakhs to ₹10 Lakhs enables businesses to scale operations, invest in machinery, or enhance working capital, fostering growth and competitiveness.

Easy Eligibility

All income-generating MSMEs involved in non-farming and non-corporate sectors are eligible for this loan. They need to have a valid Udyam Registration Number (URN) to qualify for the loan.

Benefit: Simplified eligibility criteria, including a valid Udyam Registration Number (URN), make it accessible for MSMEs in non-farming, non-corporate sectors to obtain financing, promoting entrepreneurship.

Low Interest Rate

The interest rates on Tarun loans are quite low and vary depending on the lender’s guidelines.  This helps you save huge amounts by reducing the borrowing costs.

Benefit: Competitive interest rates, typically ranging from 11% to 16% per annum, reduce the cost of borrowing, making it affordable for businesses to service loans.

Flexible Tenure

Tarun loans come with flexible repayment tenure, which can extend up to 7 years.

Benefit: Repayment tenures of up to 7 years, with possible moratorium periods, provide businesses with the flexibility to manage cash flows and repay loans comfortably.

Support to Weaker Sections of the Society

The target segments for the Tarun lending scheme include women, OBCs, SCs, STs, and minorities.

Benefit: Targeted support for women, OBCs, SCs, STs, and minorities promotes inclusive economic growth by empowering underrepresented groups in entrepreneurship.

No Collateral Requirements

You do not need to submit any of your personal or commercial assets as collateral to get a Tarun loan.

Benefit: Collateral-free loans eliminate the need for asset pledging, reducing barriers for entrepreneurs lacking tangible security, thus encouraging broader participation in the formal economy.

Here is a list of documents you must furnish when availing of a Tarun loan:

• Duly-filled MUDRA scheme application form

• Loan application form of the lending institution

• Proof of identity

• Proof of residence

• Proof of business existence, ownership, and continuity

• Balance sheet for the last two years

• Estimated balance sheet for the next financial year or the loan tenure

• Income tax returns

• Sales tax statement

• Bank account statements

• Trade references

• History of the sales generated in the current fiscal year

• Caste certificate for categories such as OBCs, SCs and STs

• A comprehensive business plan 

Some basic eligibility requirements you may have to fulfil to be eligible for this loan are as follows:

Type of Borrowers

• Individuals

• Proprietorship firms

• Partnership firms

• Private limited companies

• Public companies

• Any other legal entities engaged in non-agricultural income-generating activities

Credit History

The applicant must not be a defaulter to any bank or financial institution and should have a satisfactory credit track record

Business Plan

The applicant should present a viable business plan for a non-farm income-generating activity. Thus, businesses engaged in manufacturing, trading, or services, may qualify for the loan.

Experience and Skills

Individuals may need to demonstrate relevant skills or experience related to the proposed business activity. This will be used to assess your capability to manage the company and generate revenue, enabling timely loan repayment.

Investment Limits

The loan amount can be utilised for business expansion, covering investments in equipment, machinery, or working capital

You can easily apply for Tarun loans under the MUDRA scheme online or offline. Here are the steps you need to follow to apply for this financial product online:

• Step 1: Visit the official website of the preferred lender and download the application form for the MUDRA Tarun Loan
• Step 2: Fill in the relevant details and enter KYC details, such as information related to your Aadhaar card, voter’s ID, and more
• Step 3: Provide details about your business, including its purpose, income tax, and sales-related information
• Step 4: Select a suitable loan amount and repayment tenure
• Step 5: Submit the form once you have carefully understood the loan terms and agreement
• Step 6: The bank will review your application and approve it if you and your business meet the eligibility requirements

The Tarun Mudra Loan is ideal for small business owners looking to expand their operations. It enables you to get financial support of up to ₹10 Lakhs at low interest rates. If you need funds for equipment, working capital, or scaling your business, consider this option. With no need for collateral, it's an accessible solution to help grow your business efficiently.