E- Mudra Loan: Explore Definition, Types, Benefits, Eligibility, and Steps to Apply

Learn about the benefits, eligibility, types, and procedure of applying for an E-MUDRA loan online.
Business Loan
2 min read
29 November 2023

What is an E-MUDRA Loan?

E-MUDRA loan is a government scheme that offers financial assistance to small and micro-business enterprises. The scheme was launched in 2015 by the Prime Minister of India, Narendra Modi. Any Indian citizen who wants to start or expand their business can apply for an E-MUDRA loan.

What are the Goals and Objectives of e-MUDRA Loans

The goals and objectives of e-MUDRA Loans are multifaceted:

  1. Financial Inclusion: To provide financial assistance to small businesses and entrepreneurs who may not have access to traditional banking services.
  2. Promotion of Entrepreneurship: To encourage and support entrepreneurship by offering easy and accessible credit facilities.
  3. Empowerment: To empower individuals from various sectors, including MSMEs, artisans, and small traders, by providing them with the necessary financial resources.
  4. Digital Transformation: To leverage technology and digital platforms to streamline the loan application and approval process, making it convenient and efficient for borrowers.
  5. Economic Growth: To contribute to the overall economic growth of the nation by fostering the growth of small businesses and facilitating job creation.

Through these objectives, e-MUDRA Loans aim to drive financial inclusion, foster entrepreneurship, empower individuals, promote digital transformation, and spur economic development.

Benefits of E-MUDRA Loan

E-MUDRA loan has several benefits for the borrowers, such as:

  • The loan amount ranges from Rs. 10,000 to Rs. 10 lakh, depending on the category and nature of the business.
  • The loan can be availed for various purposes, such as working capital, machinery, equipment, raw materials, etc.
  • The loan does not require any collateral or security, making it easy and accessible for small and micro entrepreneurs.
  • The loan has a low interest rate, starting from 8.5% per annum, and a flexible repayment period, up to 5 years.
  • The loan also provides credit guarantee cover, insurance, and other benefits to the borrowers.

Eligibility criteria and documents required for E-Mudra loan

To be eligible for an E-MUDRA loan, the borrower must meet the following criteria:

  • The borrower must be a micro entrepreneur, engaged in manufacturing, trading, or service sector, including allied agricultural activities.
  • The borrower must have a valid Aadhaar number, which is linked to their bank account and mobile number.
  • The borrower must have a business plan or project report, detailing the purpose, amount, and viability of the loan.
  • The borrower must have a good credit history and repayment capacity.

Types of E-MUDRA Loan

E-MUDRA loan is classified into three types, based on the loan amount and the stage of the business:

  • Shishu: Under Shishu Mudra Loan, entrepreneurs can avail loans up to Rs. 50,000 for start-ups or new businesses, helping them meet their initial capital requirements and get their business ventures off the ground. This loan scheme offers a simple application process and hassle-free approval, making it an ideal choice for budding entrepreneurs looking for financial assistance to kick-start their entrepreneurial journey.
  • Kishor: The scheme offers loans ranging from Rs. 50,001 to Rs. 5 lakh, which can be utilised for machinery, working capital, and other operational expenses. With flexible repayment tenure, the Kishor Mudra Loan helps businesses grow and improve their operations. By applying for this loan, entrepreneurs can get the necessary support for their businesses' financial needs, giving them the confidence to take their entities to new heights.
  • Tarun: This category covers loans from Rs. 5,00,001 to Rs. 10 lakh for well-established businesses that need further growth or diversification.

E-Mudra Loan Interest Rate

E-Mudra Loans, facilitated by the Government of India, serve as a vital financial resource for micro-enterprises, small businesses, and entrepreneurs in the unorganized sector. These loans offer competitive interest rates and flexible repayment terms, empowering individuals to pursue their entrepreneurial dreams. Whether it's initiating a small-scale venture or expanding an existing business, E-Mudra Loans provide the necessary financial support to fuel growth and innovation. By fostering entrepreneurship and encouraging economic participation, these loans play a crucial role in driving sustainable development and job creation. With simplified application processes and accessible funding options, E-Mudra Loans enable aspiring entrepreneurs to overcome financial barriers and turn their visions into reality. Whether it's catering to local markets or exploring new opportunities, E-Mudra Loans pave the way for inclusive growth and prosperity across diverse sectors of the economy.

How to apply for E-MUDRA Loan?

The procedure for applying for an E-MUDRA loan is simple and hassle-free. The borrower can choose from two options:

  • Online: To apply online follow the steps below:

  1. Identify eligible financial institutions offering online E-Mudra Loan applications.
  2. Visit the official website of the chosen institution.
  3. Look for the E-Mudra Loan section or online application portal.
  4. Register an account on the website if required, providing necessary details.
  5. Complete the online application form accurately with all required information.
  6. Upload digital copies of supporting documents such as ID proof, business plan, etc.
  7. Review the application thoroughly before submission.
  8. Submit the application electronically through the online portal.
  9. Await confirmation and further communication from the lender regarding the status of your application.
  10. Once approved, follow any additional instructions provided by the lender for disbursement and repayment of the loan amount.

  • Offline: To apply offline, follow the steps below:

  1. Visit the nearest branch of a financial institution offering E-Mudra Loans.
  2. Request an application form for E-Mudra Loan from the bank representative.
  3. Fill out the application form completely and accurately.
  4. Ensure you have all required documents such as ID proof, address proof, business plan, etc.
  5. Attach the necessary documents to your application form.
  6. Submit the completed application form along with the supporting documents to the bank representative.
  7. The bank representative will verify your application and documents.
  8. Await further communication from the bank regarding the status of your application.
  9. Once approved, fulfill any additional requirements requested by the bank.
  10. Upon approval and completion of formalities, receive the sanctioned loan amount in your designated bank account.

Who can apply for an E-Mudra Loan?

E-Mudra loans are available for a wide range of individuals, including small business owners, entrepreneurs, and micro-enterprises. To apply, you must be an Indian citizen aged between 18 and 65 years with a valid Aadhar card and a good credit history. Additionally, your business should meet certain eligibility criteria, such as being in operation for at least 6 months and generating a minimum annual turnover. Self-employed professionals, such as doctors, lawyers, and chartered accountants, can also apply. However, specific eligibility requirements may vary depending on the lender. Contact us to learn more about qualifying for an E-Mudra loan.

What is purpose can the mudra loan be utilised for

MSME entrepreneurs across various sectors are eligible for MUDRA loans, including:

  1. Transport Vehicles: Purchase of small goods transport vehicles, e-rickshaws, auto rickshaws, taxis, etc., for passenger and product transportation. Additionally, tractors, tractor trolleys, or power tillers solely utilized for business operations are eligible.
  2. Personal, Social, and Community Services: Salons, fitness centres, boutiques, tailor shops, dry cleaners, repair shops, DTP and photocopying facilities, drugstores, courier services, etc.
  3. Food Products Sector: Businesses offering catering services, cold chain trucks, cold storages, ice-producing units, ice-cream making units, biscuit, bread, and bun manufacturing, and agricultural produce preservation.
  4. Textile Products Sector/Activity: Handloom, power loom, Khadi, traditional embroidery, textile printing, apparel design, stitching, and non-garment textile products like bags, vehicle accessories, etc.
  5. Commercial Loans for Traders and Shopkeepers: Financial assistance for retail stores, trade, service businesses, and non-farm income-generating ventures, with loan sizes of up to ₹10 Lakhs per enterprise.
  6. Equipment Finance Scheme for Micro Units: Establishing micro-businesses by acquiring necessary tools and equipment, with loan amounts of up to ₹10 Lakhs per recipient.
  7. Agriculture-related Activities: Pisciculture, beekeeping, poultry, livestock-rearing, agri-industries, dairy, fishing, agri-clinics, agribusiness centres, and food processing, excluding crop loans and land improvements like canals and irrigation. Services fostering livelihood or income generation are also eligible.


E-MUDRA loan is a great opportunity for small and micro entrepreneurs to avail easy and affordable credit for their business needs. The scheme aims to promote entrepreneurship, employment, and economic growth in the country. The borrowers can apply for the loan online or offline, depending on their convenience and preference. The loan has a low interest rate, a flexible repayment period, and no collateral requirement, making it attractive and accessible for the borrowers.

Additional Read: Business Loan

Additional Read: Mudra Loan


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Frequently asked questions

Who is eligible for an e-mudra loan?

Eligibility for an e-Mudra loan includes individuals engaged in micro-enterprises, small business activities, or those involved in the informal sector. Applicants should meet specified criteria, such as having a viable business plan and meeting financial institution requirements. The loan aims to support entrepreneurs in the micro-business sector, fostering financial inclusion and economic growth.

What is the interest rate on an e-mudra loan?

The interest rate on an e-Mudra loan is competitive, beginning at 8.5% per annum. Additionally, the loan offers a flexible repayment period, allowing borrowers up to 5 years to repay the borrowed amount.

What is the procedure for applying for an e-mudra loan?

The process of applying for an E-MUDRA loan is straightforward and convenient, offering two application options. Firstly, through the online method, applicants can visit the official E-MUDRA website, complete the digital application form, and upload essential documents. After receiving an OTP for e-KYC, they proceed with the e-Sign process. Upon acceptance of the sanction letter and loan agreement, the loan amount is disbursed within 24 hours.

Alternatively, applicants can opt for the offline approach, submitting physical forms and documents at an SBI branch or other affiliated bank/NBFC, receiving the disbursed loan amount in a few days upon agreement and necessary documentation.

What are the 3 categories of MUDRA loan?

The MUDRA loan, backed by the Indian Government, comprises three categories of loans, namely, Shishu Mudra Loan, Kishor Mudra Loan, and Tarun Mudra Loan. These loans are designed to support micro, small and medium enterprises (MSMEs) at different stages of their growth and expansion journey, catering to varying financial requirements.

Is any collateral required for an e-Mudra loan?

No. There is no need for any kind of collateral to avail an e-Mudra loan.

What is the repayment timeline for an e-Mudra loan?

The repayment period for an e-Mudra loan varies based on the loan amount and can range from 12 months to 60 months.

How can I download the e Mudra loan application form online?

To access the e-Mudra loan application form, visit the official PMMY website. From there, choose the appropriate form based on whether you need a loan under the Shishu, Tarun, or Kishore scheme, and proceed with downloading it.

Does the e Mudra loan scheme offer any subsidies?

The e-Mudra scheme under the Pradhan Mantri Mudra Yojana (PMMY) doesn't provide subsidies for loan applicants. Instead, it facilitates access to credit for small businesses through banks and financial institutions, offering flexible and simplified terms for borrowing.

Can E-mudra loan be availed twice?

Upon securing a MUDRA loan, it becomes part of your credit report. Consequently, when you seek additional financing from another lender, they'll be informed of your existing MUDRA loan. This may lead to a higher likelihood of your loan application being rejected by the lender.

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