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The Pradhan Mantri Mudra Yojana (PMMY) just took a significant step to encourage entrepreneurship in India. The loan limit under this scheme, originally capped at Rs 10 lakh, has now been doubled to Rs 20 lakh. This increase aims to support small business owners, startup founders, and entrepreneurs in expanding their businesses. With the updated limits, a wider range of small and medium-sized enterprises (SMEs) will be eligible for funding, helping them grow in an economy that increasingly values innovation and entrepreneurship.
Launched in 2015, the Mudra Yojana is a flagship scheme designed to offer financial assistance to micro, small, and medium enterprises (MSMEs) across India. It targets emerging entrepreneurs who lack access to formal financial institutions and are often forced to rely on high-interest, informal borrowing methods. To create a more inclusive economy, the government introduced Mudra loans under three categories:
The recent enhancement in loan limits pertains to the Tarun Loan category, with loans now available up to Rs 20 lakh.
The new Tarun Plus category includes the expanded limit, allowing eligible borrowers to access funding from Rs 10 lakh up to Rs 20 lakh. Small business owners who have previously taken loans under the Tarun category and repaid them successfully will be eligible to apply for Tarun Plus. Additionally, the loan amount will be guaranteed under the Credit Guarantee Fund for Micro Units (CGFMU), which provides banks the confidence to extend loans without collateral.
Mudra loans are accessible to various business types, especially those in need of capital for scaling and expansion. Here are some common sectors that qualify:
Applying for a Mudra Loan under the newly expanded limit involves a few simple steps. You can visit a government or bank branch to apply directly, or start the process online through the Mudra Yojana’s official website.
Here’s how to get started:
The decision to raise the Mudra loan limit is part of the government’s commitment to build a strong entrepreneurial ecosystem. By doubling the Tarun loan ceiling, small businesses in growth mode will be able to meet larger capital needs, helping them finance new equipment, expand their product lines, and enter new markets. This change aligns with the government’s vision of supporting self-reliant India and increasing employment opportunities.
The Mudra Yojana has developed into a popular financing option, thanks to its flexibility in catering to different business stages. Here’s a quick recap of the loan types:
Mudra Yojana provides access to credit for businesses that don’t have traditional collateral options, like property or large assets, which are usually required for loans. With its straightforward documentation process and guarantee coverage, this scheme helps more small businesses secure financing to meet their expansion needs.
Through the recent update in loan limits, the government reaffirms its commitment to empowering India’s entrepreneurial spirit, ensuring small business owners have the resources needed to grow sustainably.