Starting a business—or scaling an existing one—often depends on a single critical factor: access to timely capital. Many aspiring entrepreneurs in India have strong ideas and market demand but struggle to secure funding due to lack of collateral. Addressing this long-standing challenge, the Government of India has announced a major expansion under the Pradhan Mantri Mudra Yojana, bringing fresh opportunities for small business owners.

In a significant policy update, the maximum loan limit under the Mudra scheme has now been increased from ₹10 lakh to ₹20 lakh. This enhancement is aimed at empowering micro and small entrepreneurs who have already proven their credibility and are ready to take the next big step in business growth.

What Is the New ‘Tarun Plus’ Category?

Until now, the Mudra Yojana operated under three loan categories—Shishu, Kishor, and Tarun—each designed to support businesses at different growth stages. With the latest announcement, a fourth category named Tarun Plus has been added.

Tarun Plus is specially designed for entrepreneurs who have previously availed loans under the Tarun category (up to ₹10 lakh) and successfully repaid them on time. These borrowers can now apply for an additional loan ranging from ₹10 lakh to ₹20 lakh, enabling them to expand operations, invest in better infrastructure, or enter new markets.

The idea behind this move is simple: reward disciplined borrowers and help stable businesses scale up without financial roadblocks.

Mudra Loan Categories Explained

Here is how the four Mudra categories are structured:

• Shishu Loan: Up to ₹50,000 – for early-stage or micro startups
• Kishor Loan: ₹50,000 to ₹5 lakh – for growing small businesses
• Tarun Loan: ₹5 lakh to ₹10 lakh – for established enterprises
• Tarun Plus Loan: ₹10 lakh to ₹20 lakh – for expansion after successful repayment

This tiered system ensures that entrepreneurs receive financial support aligned with their business maturity.

No Collateral, No Stress

One of the strongest features of the Mudra scheme is that it is completely collateral-free. Small business owners often lack assets like property or gold to pledge against loans. Understanding this reality, the government backs these loans through the Credit Guarantee Fund for Micro Units (CGFMU).

This means banks do not ask borrowers for security, as the government itself guarantees the loan—reducing risk for lenders and stress for entrepreneurs.

Who Can Apply for Tarun Plus Loans?

Mudra loans are available to non-corporate, non-agricultural businesses involved in income-generating activities. Eligible applicants include:

• Small shop owners and traders
• Street vendors and fruit-vegetable sellers
• Transport operators and repair shops
• Artisans and cottage industries
• Manufacturing and service-sector units
• Food processing and small production businesses

Both existing entrepreneurs and expanding enterprises can benefit from this scheme.

How to Apply and Required Documents

Applicants can approach public sector banks, private banks, regional rural banks, or NBFCs. Online applications can also be submitted via the Jan Samarth Portal, which offers a transparent and streamlined process.

Commonly required documents include identity proof, address proof, business details, recent bank statements, and passport-size photographs.

Strengthening India’s Entrepreneurial Backbone

By doubling the loan limit and introducing Tarun Plus, the government has sent a strong message of trust to small entrepreneurs. The expansion of PM Mudra Yojana reflects India’s commitment to self-reliance, job creation, and grassroots economic growth.

For those with a solid business plan and a proven repayment track record, financial limitations are no longer a barrier.