Mudra Loan Category Checker
Four tiers, and one of them cannot be applied for directly. This shows which category your requirement falls into, what that tier asks for in documents, and where your profile falls short.
Your requirement
For an established unit with a track record, expanding capacity or buying equipment.
The four tiers
What to have ready for Tarun
Tarun and Tarun Plus applications usually attract a request for two years of filed returns. You have 1.
KarobarUdhar Insider Tip
Tarun Plus is not a tier you can apply into. It exists only for borrowers who have already taken a Tarun loan and repaid it in full, which makes it a reward for a clean record rather than an open category. If you need Rs.15 lakh and have never held a Mudra loan, the realistic route is Rs.10 lakh under Tarun now, a clean repayment record, and the balance later. Owners who do not know this apply for the full amount, get declined, and conclude the scheme is closed to them.
KarobarUdhar Insider Tip
Mudra loans are collateral-free because the Credit Guarantee Fund for Micro Units stands behind them, not because the lender has waived its assessment. Banks still decline these applications on weak project reports, thin bank statements and poor credit records, and a branch that is unenthusiastic can simply not process one. If you are turned away without a written reason, ask for the rejection in writing, then approach another lender. The scheme runs through commercial banks, regional rural banks, small finance banks, NBFCs and microfinance institutions, so one branch is not the whole scheme.
Tier limits reflect the structure in force since 24 October 2024, following the Union Budget 2024-25 announcement of 23 July 2024 that introduced Tarun Plus. Documentation lists are indicative and vary by lender. Interest rates under the scheme are not fixed by government; each lender prices against its own benchmark, so compare offers rather than assuming a common rate.
The tier nobody explains properly
Since the limit was raised to Rs.20 lakh, a great deal of coverage describes Mudra as offering up to that amount without mentioning the condition attached. Tarun Plus, the tier that spans Rs.10 lakh to Rs.20 lakh, is available only to borrowers who have already taken a Tarun loan and repaid it in full.
For a first-time applicant that makes the practical ceiling Rs.10 lakh, not Rs.20 lakh. Owners who approach a branch asking for Rs.15 lakh on a first application are declined, and frequently conclude the scheme does not work rather than that they applied into the wrong tier. The route is Rs.10 lakh now, a clean repayment record, and the balance on the next round.
The second thing worth knowing is that documentation is not uniform across the tiers. A Shishu application is genuinely light. A Tarun application will attract requests for filed returns and financial statements, and arriving without them is what turns a two-week sanction into a two-month one.
How to use it
- Enter the amount you actually need. The tier is set by amount. Asking for more than your tier allows is a decline rather than a negotiation.
- Select your business activity honestly. Crop farming and corporate structures are outside the scheme. Allied agriculture is inside it.
- Say whether you have repaid a Tarun loan. This single answer decides whether Tarun Plus is available to you at all.
- Work through the document list before applying. Documentation grows with the tier. A Tarun application arriving with Shishu paperwork stalls.
Common questions
What are the four Mudra categories and their limits?
Shishu covers loans up to Rs.50,000. Kishore covers above Rs.50,000 and up to Rs.5 lakh. Tarun covers above Rs.5 lakh and up to Rs.10 lakh. Tarun Plus covers above Rs.10 lakh and up to Rs.20 lakh. Tarun Plus was announced in the Union Budget 2024-25 and took effect on 24 October 2024.
Can I apply directly for Tarun Plus?
No, and this is the most common misunderstanding about the scheme. Tarun Plus is open only to borrowers who have already availed a loan under the Tarun category and repaid it in full. It rewards a clean repayment record rather than functioning as an open tier. Without that history the maximum available to you is Rs.10 lakh under Tarun.
Are Mudra loans really collateral-free?
Yes. The Credit Guarantee Fund for Micro Units stands behind them, which is what allows lenders to advance without security. That does not mean the application is unassessed. Banks decline these regularly on weak project reports, thin bank statements or a poor credit record, and the guarantee protects the lender rather than removing your obligation to repay.
Which businesses are eligible?
Non-corporate, non-farm small and micro enterprises engaged in manufacturing, processing, trading or services, along with allied agricultural activities such as dairy, poultry, beekeeping and fisheries. Crop farming itself is outside the scheme, and a business with corporate structure is not eligible. The applicant must not be a defaulter with any bank or financial institution.
What interest rate applies to a Mudra loan?
There is no government-fixed rate. Each lender prices against its own benchmark, so rates differ meaningfully between public sector banks, private banks, small finance banks, NBFCs and microfinance institutions. Compare offers rather than assuming the scheme carries a common rate.