Quick Summary — What You Need to Know
- Four tiers cover the full growth journey: Shishu (up to ₹50,000), Kishor (₹50,000-₹5 Lakh), Tarun (₹5-10 Lakh), and Tarun Plus (₹10-20 Lakh), matching loan size to a business's stage of development.
- There is no fixed government interest rate: each lending bank, RRB, small finance bank, MFI, or NBFC sets its own rate based on its MCLR plus a spread, meaning the same collateral-free guarantee can cost meaningfully different amounts depending on where you apply.
- Tarun Plus is exclusively for repeat, proven borrowers: introduced in Union Budget 2024-25, this ₹20 Lakh ceiling is only available to entrepreneurs who have already taken and successfully repaid a Tarun loan with a clean record — it isn't accessible to first-time borrowers.
- Loans are fully collateral-free and guarantee-free at every tier, backed by the Credit Guarantee Fund for Micro Units (CGFMU), a distinct mechanism from the CGTMSE scheme used for other MSME collateral-free lending.
- Agriculture-allied activities qualify, direct farming does not: poultry, dairy, fishery, beekeeping, and food processing are eligible; crop loans and direct activities like irrigation are excluded.
- Important takeaway: treating your first MUDRA loan as the foundation for a stronger second application — building a clean repayment record deliberately, rather than just taking the loan and moving on — is what actually unlocks Tarun Plus's doubled ceiling later.
Table of Contents
- No Fixed Rate: Why Shopping Around Matters
- The Four Tiers, Explained
- The Tarun Plus Graduation Strategy
- The CGFMU Guarantee, Not CGTMSE
- Comparison: The Four MUDRA Tiers
- Eligibility: Who Actually Qualifies
- How to Apply
- Worked Example: Building Toward Tarun Plus
- Insider Insight: Rate-Shopping Across Lenders
- Decision Matrix: Which Tier Fits Your Business
- Free Calculators
- Myth vs. Fact
- Frequently Asked Questions
- Related Reading
- Conclusion & Next Steps
No Fixed Rate: Why Shopping Around Matters
The Four Tiers, Explained
The Tarun Plus Graduation Strategy
The CGFMU Guarantee, Not CGTMSE
MUDRA loans are backed by the Credit Guarantee Fund for Micro Units (CGFMU), a mechanism distinct from CGTMSE, which backs other collateral-free MSME lending. Both serve a similar purpose — protecting lenders so they can extend credit without collateral — but they're separate schemes, and understanding this distinction matters if you're also exploring non-MUDRA collateral-free financing alongside a MUDRA loan.
Comparison: The Four MUDRA Tiers
| Tier | Loan Range | Typical Business Stage |
|---|---|---|
| Shishu | Up to ₹50,000 | Very early-stage, first-time entrepreneurs |
| Kishor | ₹50,000 - ₹5 Lakh | Established, seeking growth capital |
| Tarun | ₹5 Lakh - ₹10 Lakh | Well-established, expansion-focused |
| Tarun Plus | ₹10 Lakh - ₹20 Lakh | Proven repayment history on a prior Tarun loan |
Eligibility: Who Actually Qualifies
- Indian citizen operating a non-corporate, non-farm business.
- Manufacturing, trading, or service sector enterprise.
- Agriculture-allied activities such as poultry, dairy, fishery, beekeeping, and food processing are eligible.
- Direct farming activities like crop loans, irrigation, or land improvement are not covered.
- For Tarun Plus specifically: a prior Tarun loan, fully repaid, with a clean record.
How to Apply
Applications can be made digitally through the JanSamarth portal or the Udyamimitra portal, or in person at any participating commercial bank, Regional Rural Bank, small finance bank, MFI, or NBFC. The process typically involves registering as a new or existing entrepreneur, selecting the appropriate tier, and submitting identity, business, and banking documentation.
Worked Example: Building Toward Tarun Plus
Year 1: Tarun
A West Bengal small manufacturer took a ₹9 Lakh loan under the Tarun category to expand production capacity, treating the repayment schedule as a priority alongside day-to-day operations.
The Repayment
The loan was repaid in full and on schedule, with no defaults, establishing a clean credit history specifically under the Tarun category.
Year 3: Tarun Plus
With that repayment record in place, the business became eligible for a fresh loan under Tarun Plus, this time up to ₹18 Lakh, to fund a further expansion.
The Pattern
The first loan wasn't just financing — it was the qualifying step that made the larger, second loan possible.
Insider Insight: Rate-Shopping Across Lenders
Decision Matrix: Which Tier Fits Your Business
| If your situation is... | Consider |
|---|---|
| Just starting out, very small capital need | Shishu |
| Established with moderate growth capital needs | Kishor |
| Well-established, larger expansion need | Tarun |
| Already repaid a Tarun loan cleanly, need more | Tarun Plus |
| Need collateral-free financing beyond ₹20 Lakh | Explore CGTMSE-backed alternatives |
Free Calculators
Check which tier fits your funding need and estimate your EMI. For a full assessment, talk to our advisory desk.
Tier Checker
MUDRA Loan EMI Calculator
Myth vs. Fact on PM Mudra Yojana
Frequently Asked Questions
Trusted Across West Bengal
Conclusion & Next Steps
PM Mudra Yojana rewards a longer-term view. Shopping across lenders for the best rate on the same collateral-free guarantee is worth doing at every tier, and treating a first Tarun loan's repayment discipline as a deliberate investment — not just a one-off transaction — is what actually unlocks Tarun Plus's doubled ceiling down the line.
CreditCares has facilitated over ₹2,000 Crore in loan disbursals for 500+ clients across 80+ banks and NBFCs, with zero upfront fee — headquartered at Godrej Waterside, Sector V, Kolkata, and helping entrepreneurs across West Bengal access and structure PM Mudra Yojana financing.
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Regulatory Disclosure: This content is educational and does not constitute financial advice. Loan limits, eligibility criteria, and interest rates are set by the Ministry of MSME and individual lending institutions, and are subject to change. Always confirm current terms directly with your lender or the official PMMY/JanSamarth portal. Loan approval, sanction amount, and terms remain at the sole discretion of the lending institution.