The Pradhan Mantri Mudra Yojana (PMMY) remains the backbone of Indian entrepreneurship. In 2026, digital onboarding for Mudra loans has made capital more accessible than ever for small and micro-enterprises.
Understanding the Three Mudra Categories
- Shishu: Up to ₹50,000 — For businesses in their infancy. Ideal for solo operators, street vendors, and home-based businesses.
- Kishore: ₹50,000 to ₹5 Lakhs — For growing businesses that need working capital. Perfect for small shops, service providers, and artisans.
- Tarun: ₹5 Lakhs to ₹20 Lakhs — For established businesses ready to scale. Suitable for small manufacturers, traders, and service companies.
Key Benefits of Mudra 2026
- Zero collateral — No property or asset pledge required
- No guarantor needed — Your business plan is your guarantee
- Interest rates: 7.3% to 12% (varies by bank and category)
- Repayment: 3 to 7 years depending on loan type
- Women entrepreneurs: Get priority processing and reduced rates at select banks
- Digital application: Apply via Udyamimitra portal or through KBD
Eligibility — Who Can Apply?
Any Indian citizen engaged in a non-corporate, non-farm income-generating activity:
- Small manufacturing units
- Shopkeepers and traders
- Food and street vendors
- Repair shops and service providers
- Artisans and craftsmen
- Transport operators (auto/taxi)
How to Move from Shishu to Tarun
At KBD, we've helped micro-entrepreneurs move from the 'Shishu' category to 'Tarun' with structured financial planning:
- Start with Shishu: Use ₹50K for initial inventory/equipment
- Build 12-month track record: Consistent bank deposits showing business revenue
- File ITR: Even if income is small, filing ITR creates a formal business record
- Apply for Kishore: With repayment history, scale to ₹5L
- Graduate to Tarun: After 2-3 years of growth, access ₹20L for major expansion
Common Rejection Reasons & Fixes
- "No bank account history" — Open a current account 6 months before applying
- "No ITR" — File at least 1 year's ITR, even nil returns
- "Existing defaults" — Clear all outstanding dues and wait 3 months
Planning to start or expand a small business? Talk to KBD about your Mudra loan options — we'll guide you from application to disbursal.