Pradhan Mantri Mudra Yojana (PMMY) Loan

• The Pradhan Mantri Mudra Yojana (PMMY) offers a range of advantages to MSMEs, including convenient payment options, competitive interest rates, and a simplified application process. 
• There are four types of loans: the Shishu, the Kishor, the Tarun, and the Tarun Plus, each for different stages of a business. 

What is Pradhan Mantri Mudra Yojana (PMMY)?

Launched in April 2015 by Prime Minister Narendra Modi in New Delhi, it provides accessible and collateral fees for SMEs, including non-corporate, non-farm micro and small enterprises. 

Mudra loans are collateral-free loans, which means you don't have to put up any assets as security, making it easier for you to access the capital needed to grow your businesses.

Latest updates

During the Union Budget 2024, the Finance Ministry announced the introduction of a new loan category named Tarun Plus with an increase in loan limit to Rs 20 lakh. SMEs who have successfully repaid their loans through the Tarun category are eligible for the new Tarun Plus category, having loans between Rs 10 lakh and Rs 20 lakh. 

The scheme has also helped to boost the economy by providing much-needed credit to SMEs like yours through its low interest rates, flexible repayment terms and easy application process.

Types of PMMY Loans

There are four main types of loans tailored to the financial needs of beneficiaries:

Shishu Loan

These loans offer up to Rs50,000 and are perfect for businesses that are just starting. You can use a Shishu loan to cover the costs of things like inventory, equipment, and daily current affairs.

Kishor Loan 

You might qualify for a Kishor loan if your SME is a little more established. It provides loans between Rs 50,000 and Rs 5 lakh, which can be used to expand your business or make improvements. 

Tarun Loan 

If your SME is growing rapidly, you can consider opting for this. With loan amounts ranging from Rs 5 lakh to Rs 10 lakh, you can use it to develop new products or acquire another business.

Tarun Plus Loan 

Tarun Plus is a new category for loans above Rs 10 lakh and up to Rs 20 lakh for SMEs who have repaid their loans under the Tarun category.

Benefits of PMMY to MSMEs

As an SME, this loan provides numerous benefits, including payment flexibility, competitive interest rates and a straightforward application process which can greatly support your business growth and international expansion.

Flexibility in payment

It provides SMEs with flexible repayment options, removing the need for collateral and allowing penalty-free pre-payment. You can also customize your repayment schedule to match your cash flow. 

Low interest rates

Mudra loans offer competitive interest rates that start at 7.30% per annum, and the loan repayment tenure ranges between 1 year and 7 years, typically lower than traditional loans. 

Easy to apply

Applying for the Mudra loan is a hassle-free experience, as the process is straightforward and can be completed online or through designated banks and NBFCs. Additionally, this loan scheme is a cost-effective financing option since it does not impose processing fees.