Mudra Loan Interest Rates 2026

Mudra Loan Interest Rates 2026: Complete Bank-Wise List, Eligibility & How to Apply

The Pradhan Mantri Mudra Yojana (PMMY) continues to be the backbone of small-scale entrepreneurship in India. As we navigate through 2026, the demand for accessible, collateral-free credit has reached new heights. If you are a budding entrepreneur or a small business owner looking to scale, understanding the latest Mudra Loan Interest Rates in 2026 is crucial for your financial planning.

In this comprehensive guide, we break down the interest rates across major public and private sector banks, explore the new “Tarun Plus” category, and help you identify the best bank for your business needs.

What is a Mudra Loan?

Launched by the Government of India, the Mudra Loan scheme provides financial support to non-corporate, non-farm small/micro-enterprises. These loans are offered by Commercial Banks, RRBs, Small Finance Banks, MFIs, and NBFCs.

Key Highlights of Mudra Loan 2026:

• No Collateral: You don’t need to pledge any assets.
• New Limit: Following recent updates, the maximum loan limit for the highest category has been enhanced to ₹20 Lakhs for eligible borrowers.
• Flexible Tenure: Repayment periods generally range from 3 to 7 years.
• Purpose: Can be used for working capital, buying machinery, or business expansion.

Types of Mudra Loans in 2026

The scheme is divided into four distinct categories based on the stage of growth and funding requirements of the micro unit:

1. Shishu: Loans up to ₹50,000 (For startups and new businesses).
2. Kishor: Loans from ₹50,001 to ₹5 Lakhs (For mid-stage businesses).
3. Tarun: Loans from ₹5,00,001 to ₹10 Lakhs (For established businesses).
4. Tarun Plus: Loans from ₹10 Lakhs to ₹20 Lakhs (For businesses that have successfully repaid previous Tarun loans).

Mudra Loan Interest Rates 2026: Bank-Wise Comparison

Interest rates are not fixed by the government; instead, they are determined by the lending institution based on the MCLR (Marginal Cost of Funds Based Lending Rate) and the borrower’s credit profile.

Note: These rates are indicative and subject to change based on RBI policy updates and individual credit scores. Always check with the branch for the most current “Card Rate.”

SBI is te best Bank for Mudra Loan in 2026? Rates, Eligibility & New ₹20 Lakh Limit.

Factors Affecting Your Mudra Loan Interest Rate

While the PMMY scheme aims for affordability, several factors influence the final rate a bank offers you:

• Credit Score: A CIBIL score above 750 can help you negotiate a lower interest rate.
• Business Vintage: Established businesses (Tarun category) often get better rates than brand-new startups (Shishu).
• Relationship with Bank: Existing customers with a good savings/current account track record often receive preferential rates.
• Nature of Business: Manufacturing units might get slightly different rates compared to service-based startups.

Which Bank is Best for a Mudra Loan in 2026?

Choosing the “best” bank depends on your specific needs, but based on 2026 data, here are our recommendations:

• For Lowest Interest Rates: Punjab National Bank (PNB) and State Bank of India (SBI) typically offer the most competitive rates, often hovering around the 9.5% to 10% mark for reliable borrowers.
• For Fast Processing: HDFC Bank and ICICI Bank are known for quicker digital processing and “e-Mudra” facilities, though their interest rates may be 1-2% higher than public sector banks.
• For Micro-Entrepreneurs (Shishu): SBI is the leader in Shishu loan disbursements, with a very simplified application process for loans under ₹50,000.

Verdict: If you have a clean credit history, SBI is the most reliable choice for long-term savings on interest.

Eligibility Criteria for 2026

To apply for a Mudra loan this year, you must meet the following basic requirements:

• Citizenship: Must be an Indian citizen.
• Business Type: Small manufacturing units, service sector units, shopkeepers, fruit/vegetable vendors, artisans, or agriculture-allied activities (poultry, dairy).
• Age: Minimum 18 years, Maximum 65 years.
• Non-Defaulter: You must not have defaulted on any previous bank loans.

Documents Required

Keep these documents ready to ensure a high approval rate:

1. Identity Proof: Aadhaar Card, PAN Card, or Voter ID.
2. Address Proof: Electricity bill, Gas bill, or Rent Agreement.
3. Business Proof: Registration certificates, Udyam Registration (highly recommended), and GST returns (if applicable).
4. Bank Statements: Last 6 to 12 months of your primary bank account.
5. Project Report: A brief summary of your business plan and how you intend to use the funds.

How to Apply for Mudra Loan Online (Step-by-Step)

In 2026, the process is almost entirely digital through the Udyami Mitra portal or individual bank websites.

• Step 1: Visit the official portal (udyamimitra.in) or your preferred bank’s e-Mudra page.
• Step 2: Select the category (Shishu, Kishor, or Tarun).
• Step 3: Fill in the personal and business details accurately.
• Step 4: Upload the required digital copies of your documents.
• Step 5: Submit the application. You will receive an Application Reference Number (ARN) for tracking.

Frequently Asked Questions (FAQs)

Q1. Is there any subsidy on Mudra Loan interest rates?

While there is no direct “cashback” subsidy, the government occasionally offers interest subvention schemes (like the 2% interest subvention for Shishu loans during specific economic periods).

Q2. Can I get a Mudra Loan for a personal vehicle?

No. Mudra loans are strictly for commercial purposes. However, you can use it to buy a commercial vehicle (like a taxi or tractor) if it is central to your business.

Q3. How much time does it take for the loan to be disbursed?

Shishu loans can be approved within 7-10 working days. Tarun and Tarun Plus loans may take 2-4 weeks due to the detailed verification of business financials.

Final Thoughts

The Mudra Loan scheme remains a powerful tool for financial inclusion in 2026. By choosing a bank like SBI or PNB, you can keep your interest burden low and focus on what matters most—growing your business. Ensure your Udyam Registration is updated, as it has become a mandatory requirement for most lenders this year.

Would you like me to help you draft a sample Project Report for your Mudra Loan application?