Mudra Tarun Loan: Eligibility, Limit and How to Apply
Reviewed by: WeCredit Research Team
A Mudra Tarun loan is a collateral-free business loan of more than Rs. 5 lakh and up to Rs. 10 lakh under Pradhan Mantri Mudra Yojana (PMMY). It is the third of four Mudra categories, meant for a small non-farm business that has outgrown a smaller loan, and you apply to a bank, NBFC or microfinance lender, not to MUDRA itself.
Quick answer: Tarun covers Mudra loans above Rs. 5 lakh up to Rs. 10 lakh. It is only 2 percent of all Mudra loans by number but 25 percent of the amount sanctioned, because each loan is large. Interest rates are set by each lender within RBI guidelines, and Mudra carries no subsidy. WeCredit does not sanction government scheme loans, so confirm every detail with the lender and on the official sources listed at the end.
Tarun Loan at a Glance
| Item | Detail |
|---|---|
| Loan amount | Above Rs. 5 lakh and up to Rs. 10 lakh |
| Scheme | Pradhan Mantri Mudra Yojana (PMMY), launched 8 April 2015 |
| Security | Collateral-free; PMMY loans up to Rs. 20 lakh are described as collateral-free |
| Subsidy | None. The MUDRA website states there is no subsidy on PMMY loans |
| Who it is for | Non-corporate, non-farm micro and small businesses that need a larger loan for growth or working capital |
| Who lends | Banks, regional rural banks, small finance banks, NBFCs and microfinance institutions |
| Interest rate | Set by each lender within RBI guidelines; no single national rate is published |
| Repayment | Based on the cash flow of the business and the lender’s norms |
| Where to apply | A lender branch or the Udyamimitra portal |
Where Tarun Sits Inside the Mudra Scheme
PMMY splits its loans into categories by the amount you borrow. Shishu goes up to Rs. 50,000, Kishor covers above Rs. 50,000 up to Rs. 5 lakh, Tarun covers above Rs. 5 lakh up to Rs. 10 lakh, and Tarun Plus covers above Rs. 10 lakh up to Rs. 20 lakh. If your need is smaller, the Mudra Kishor loan is the step below Tarun.
A PIB release of 8 April 2026, with data as on 27 March 2026, shows how Tarun performs in practice. It accounts for 2 percent of all PMMY loans but 25 percent of the amount sanctioned. The same release records 55 lakh accounts in the Tarun category, with Rs. 4.82 lakh crore sanctioned and Rs. 4.67 lakh crore disbursed. Women borrowers received Rs. 1.09 lakh crore under Tarun, and minority borrowers received Rs. 0.62 lakh crore.
| Category | Loan amount | Share of loans | Share of amount sanctioned |
|---|---|---|---|
| Shishu | Up to Rs. 50,000 | 74% | 32% |
| Kishor | Above Rs. 50,000 and up to Rs. 5 lakh | 24% | 43% |
| Tarun | Above Rs. 5 lakh and up to Rs. 10 lakh | 2% | 25% |
| Tarun Plus | Above Rs. 10 lakh and up to Rs. 20 lakh | 0.004% | 0.095% |
Who Is Eligible for a Tarun Loan
The MUDRA website describes PMMY as lending to non-corporate, non-farm small and micro enterprises. Its FAQ says any Indian citizen who is eligible for a loan and has a business plan for an income-generating activity can apply. The proposal should be for setting up a new micro enterprise or upgrading an existing one in manufacturing, processing, trading or services. Agri-allied activities are also covered, while crop farming is not.
There is no separate Tarun eligibility test on the official pages, so the lender applies its own credit checks within these scheme limits. In practice three things matter: the business must be a non-farm income-generating activity, the amount you need must fall in the Tarun band, and the lender must be satisfied that the business can repay a loan of this size. A loan of Rs. 5 lakh to Rs. 10 lakh usually means the lender wants to see some trading history, so a running unit has an easier case than a brand-new idea.
The official pages do not make a Shishu or Kishor loan a condition for Tarun, so the lender looks at your plan and your records. Repaying an earlier loan on time helps, because it gives the lender a record to look at.
What Backs a Tarun Loan
Tarun loans come from member lending institutions: scheduled commercial banks, regional rural banks, small finance banks, NBFCs and microfinance institutions. MUDRA, the Micro Units Development and Refinance Agency, refinances these lenders and does not lend to you directly. PIB records that the Credit Guarantee Fund for Micro Units now covers the enhanced loans up to Rs. 20 lakh, which supports collateral-free lending. The guarantee protects the lender and does not make approval automatic. The lender still reviews your business, your repayment capacity and your papers, and it can decline.
The MUDRA website states that there are no agents or middlemen engaged by MUDRA for availing of Mudra loans, and it advises borrowers to keep away from people posing as MUDRA agents.
Documents Lenders Usually Ask For
There is no single national document list for Mudra loans, and the MUDRA FAQ says documents are set by the lending institution. It adds that a PAN card is not compulsory for PMMY loans and that income tax returns are generally not insisted on for small-value loans. For a Rs. 5 lakh to Rs. 10 lakh request, though, expect a fuller file than for Shishu:
- Aadhaar of the applicant, and of partners if the unit is a partnership firm, along with PAN if the lender asks for it
- Address proof for the home and for the business place, such as a utility bill or rent agreement
- Proof the business exists: Udyam registration, shop licence, GST registration if applicable, or a partnership deed
- Bank statements for the last six to twelve months, and sales records or GST returns if you have them
- A business plan or project note covering what you sell, expected monthly sales, costs and how the loan will be used
- A quotation or proforma invoice for any machine, vehicle or stock you plan to buy
- Passport-size photographs
Ask the branch for its exact list before you go. The MUDRA FAQ notes that Kishor and Tarun use a three-page indicative application format, longer than the one-page Shishu form, and the lender may supply its own format.
How to Apply for a Tarun Loan: Step by Step
The MUDRA website says you can approach a branch of a bank, NBFC or microfinance lender, or file an online application on the Udyamimitra portal. The MUDRA FAQ adds that the application is made in the format the lending institution provides.
- Work out the amount and what it will buy. It should be above Rs. 5 lakh and no more than Rs. 10 lakh for Tarun.
- Collect your documents and prepare a plan with expected sales, costs and the EMI you can afford.
- Choose a lender. A bank where you already run a current account can see your transactions, which often makes the file easier to assess.
- Ask for a Mudra loan in the Tarun category and submit the application at the branch or on Udyamimitra.
- Answer the lender’s questions and allow a visit to your business place if asked.
- Read the sanction letter. Check the interest rate, repayment period, EMI, processing charges and any insurance before you sign.
- Use the money for the stated business purpose and repay on schedule.
Never pay an agent to arrange a Mudra loan. MUDRA has said it uses no agents or middlemen.
Worked Example: A Rs. 8 Lakh Tarun Loan
Say a packaging unit wants Rs. 8,00,000 for a printing machine and raw material. The interest rate here is an assumption for illustration only, because real rates differ by lender and change over time. At an assumed 12 percent a year over 60 months, the EMI works out to about Rs. 17,796. Over five years the unit repays about Rs. 10,67,733, of which about Rs. 2,67,733 is interest. Stretching the same loan to 84 months lowers the EMI to about Rs. 14,122, but total repayment rises to about Rs. 11,86,264 and interest to about Rs. 3,86,264. A shorter term saves money overall, while a longer term eases the monthly burden. Pick the EMI your sales can carry in a slow month, not only a good one.
Is Tarun Right for You? Checklist
- Is your business a non-farm, income-generating activity in manufacturing, processing, trading or services? If yes, continue.
- Do you need more than Rs. 5 lakh but not more than Rs. 10 lakh? If you need less, look at Kishor. If you need more, ask about Tarun Plus.
- Can you show the lender proof of the business and a record of bank transactions?
- Do you have a quotation or a costed plan for how the money will be used?
- Will your monthly earnings cover the EMI with room to spare?
- Are your existing loans and card dues paid on time?
Common Rejection Reasons and Fixes
These are common patterns, not an official list. Each lender decides its own cases.
| Common reason | What to do |
|---|---|
| Activity is crop farming or otherwise outside the scheme | Check that the business is a non-farm income-generating activity before you apply |
| Amount does not match the plan | Tie the amount to a quotation or costed plan, and pick the right category |
| Thin business record for a Rs. 5 lakh plus request | Show bank statements and sales records, or start with a Kishor loan and build a repayment history |
| Name or address differs across documents | Correct Aadhaar, PAN and bank records first |
| Overdue loans or missed EMIs | Clear dues and ask the lender what it needs to reconsider |
| EMI too high for income | Ask for a smaller amount or a longer term |
How to Improve Your Chances of Approval
Lenders decide Tarun loans one by one, so a clean and complete application helps. These habits are general good practice, not scheme rules.
- Ask for an amount that matches a clear need, and attach a quotation.
- Run daily sales through a bank account for several months so the lender can see regular income.
- Keep Aadhaar, PAN, mobile number and bank details consistent.
- Clear overdue EMIs and card dues before you apply.
- Apply to one lender at a time. If you are declined, ask for the reason in plain words and fix it before trying another.
Repayment also matters beyond this loan. PIB describes Tarun Plus, which allows Rs. 10 lakh to Rs. 20 lakh, as designed for borrowers who have previously availed and successfully repaid loans under the Tarun category. A clean Tarun repayment is the route to the next step up.
Timeline: Key Dates for Tarun
| Date | Event |
|---|---|
| 8 April 2015 | PMMY launched with loans of up to Rs. 10 lakh in Shishu, Kishor and Tarun categories |
| 23 July 2024 | Union Budget 2024-25 announced raising the Mudra limit to Rs. 20 lakh |
| 24 October 2024 | New Rs. 20 lakh limit took effect; Tarun Plus added for borrowers who repaid Tarun loans |
| 27 March 2026 | PIB data date: 57.79 crore loans worth Rs. 40.07 lakh crore disbursed since launch |
When Another Scheme Fits Better
If you need less than Rs. 5 lakh, Kishor or Shishu is the better fit. If you need more than Rs. 10 lakh, Tarun Plus is designed for borrowers who have already repaid a Tarun loan. A lender that still asks for collateral on a larger loan may be able to use a credit guarantee, and the CGTMSE guarantee scheme is one option to raise with your lender.
| Category | Loan amount | Best for |
|---|---|---|
| Mudra Kishor | Above Rs. 50,000 up to Rs. 5 lakh | Small units with a mid-size need |
| Mudra Tarun | Above Rs. 5 lakh up to Rs. 10 lakh | Growing units that need equipment or working capital |
| Mudra Tarun Plus | Above Rs. 10 lakh up to Rs. 20 lakh | Borrowers who have repaid a Tarun loan |
Common Mistakes
- Paying an agent. MUDRA states it has no agents or middlemen, so apply directly.
- Expecting a subsidy. The MUDRA website says there is no subsidy on PMMY loans.
- Assuming Tarun has a fixed national interest rate. Rates are set by each lender within RBI guidelines.
- Borrowing the full Rs. 10 lakh when a smaller amount would do.
- Signing without reading the sanction letter for fees and the repayment schedule.
Frequently Asked Questions
What is the limit of a Tarun loan?
Above Rs. 5 lakh and up to Rs. 10 lakh. Smaller needs fall under Kishor or Shishu, and Rs. 10 lakh to Rs. 20 lakh falls under Tarun Plus.
Is a Tarun loan collateral-free?
Yes. PIB describes PMMY loans up to Rs. 20 lakh as collateral-free. The lender still checks that your business can repay.
What is the interest rate on a Mudra Tarun loan?
It varies by lender. The MUDRA website says rates are deregulated and banks are advised to charge reasonable rates within RBI guidelines. Ask the lender for the rate in writing before you sign.
Who can apply for a Tarun loan?
A non-corporate, non-farm micro or small business in manufacturing, processing, trading, services or allied agriculture, new or already running, with a business plan for an income-generating activity.
Is there a subsidy on a Tarun loan?
No. The MUDRA website states that there is no subsidy for loans given under PMMY.
Can I apply for a Tarun loan online?
Yes. The MUDRA website says borrowers can file an online application on the Udyamimitra portal. You can also apply at a branch.
Is PAN card compulsory for a Mudra loan?
The MUDRA FAQ says a PAN card is not compulsory to avail PMMY loans. Individual lenders set their own document lists, so ask your branch.
Does WeCredit sanction Tarun loans?
No. WeCredit does not sanction government scheme loans. It explains how schemes work. Confirm current terms with the lender and on the official sources below.
Where to Go Next
To compare Tarun with other options for small businesses, browse the government loan schemes hub.
