By the FlexiLoans Editorial Desk · Reviewed by a business-lending specialist · Updated August 2026
Quick answer: Yes — you can now borrow up to ₹20 lakh under the new Tarun Plus category of the Mudra (PMMY) scheme, up from ₹10 lakh earlier. Mudra loan eligibility covers non-farm micro enterprises with a viable business plan. The loan stays collateral-free, and applicants aged 18–65 can apply through banks, NBFCs or fintech lenders.
In this guide:
- What the ₹20 lakh Tarun Plus upgrade actually means
- The four Mudra tiers, side by side
- Who qualifies and how to check with the tool below
- Documents, steps, interest and EMI
- How Tarun Plus stacks up against other MSME loans
Key takeaways
- Tarun Plus raises the Mudra ceiling from ₹10 lakh to ₹20 lakh. It went live on 24 October 2024.
- It is a graduation tier. You need to have taken and fully repaid a Tarun loan first.
- All Mudra loans stay collateral-free and backed by a government guarantee.
- Rates are set by each lender, so compare offers before you sign.
The ₹20 lakh Tarun Plus Mudra loan, explained simply
For years, the Mudra (PMMY) scheme capped small-business loans at ₹10 lakh. That changed in Budget 2024. The government raised the top limit to ₹20 lakh through a fresh tier called Tarun Plus. It became operational on 24 October 2024.
So a growing shop, workshop or service unit can now access double the earlier ceiling — still without pledging any security. Tarun Plus is built for entrepreneurs who have already availed and successfully repaid a Tarun loan. In short, a clean track record unlocks a bigger limit.
This guide walks you through Mudra loan eligibility for the ₹20 lakh tier, the documents you need, and how to apply for a Mudra loan under the new rules.
Mudra loan tiers: Shishu, Kishore, Tarun, Tarun Plus
The scheme splits lending into four tiers by amount. Each tier suits a different stage of business growth.
| Mudra tier | Loan amount | Best suited for |
|---|---|---|
| Shishu | Up to ₹50,000 | New or very early-stage micro units |
| Kishore | ₹50,001 – ₹5 lakh | Growing firms buying stock or small tools |
| Tarun | ₹5 lakh – ₹10 lakh | Established units scaling up operations |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Borrowers who repaid a Tarun loan and need more |
Source: MUDRA/PMMY scheme structure; Tarun Plus operational from 24 October 2024.
The bigger the loan, the more track record and paperwork a lender will expect. Shishu is quick and light. Tarun Plus is a step-up reward for proven borrowers.
Mudra loan eligibility: who qualifies for ₹20 lakh
Mudra loan eligibility follows a few simple rules. Meet them, and any Mudra lender can consider you.
- Business type: a non-farm, income-generating micro enterprise — manufacturing, trading, services or allied activities like dairy and poultry.
- Track record: for Tarun Plus specifically, you must have taken and fully repaid an earlier Tarun loan.
- Age: the applicant should be 18 to 65 years old.
- Repayment capacity: a viable plan and cash flow that comfortably covers the EMI.
- Clean record: you should not be a defaulter with any bank or NBFC.
- Citizenship: you must be an Indian citizen.
The ₹20 lakh tier is a graduation reward — it rewards borrowers who handled a Tarun loan responsibly. Not sure which tier fits your numbers? Use the Tarun Plus eligibility checker (the tool below). Enter your business profile, and it maps you to the right category and likely amount, up to ₹20 lakh.
Documents you need to apply for a Mudra loan online
Keep your paperwork ready before you start. It cuts back-and-forth and speeds up approval. The table below pairs the eligibility basics with the documents lenders usually ask for.
| Eligibility at a glance | Documents to keep ready |
|---|---|
| Age 18–65 years | Aadhaar and PAN (KYC) |
| Non-farm micro enterprise | Passport-size photographs |
| Viable, income-generating activity | Business proof / Udyam registration |
| Repaid Tarun loan (for Tarun Plus) | Bank statements (6–12 months) |
| No active loan default | Quotation for machinery or assets, if any |
| Indian citizen | GST returns or ITR (for higher amounts) |
Source: Indicative checklist; exact requirements vary by lender. Verify on the official Mudra (PMMY) portal.
Here is the simple path to apply:
- Register on Udyam — free MSME registration that strengthens your file.
- Pick a lender — a bank, NBFC or fintech that offers Mudra loans.
- Confirm your tier using the tool below so you apply for the right amount.
- Submit the form with your KYC and business documents.
- Get assessed and disbursed once the lender verifies everything.
Interest rate, tenure and repayment on Mudra loans
The Mudra scheme does not fix one rate for everyone. Each lender prices your loan on your profile, business vintage and repayment history. So two borrowers can get different rates for the same amount.
- Banks typically start from around 9–16% per annum (indicative).
- NBFCs and fintech lenders usually range from about 14–30% per annum (indicative).
- Verify the live rate before signing — numbers change often.
The table shows an illustrative EMI on a full ₹20 lakh loan at 12% per annum, reducing balance.
| Tenure | Indicative EMI | Total interest (approx.) |
|---|---|---|
| 36 months | ₹66,430 | ₹3.91 lakh |
| 48 months | ₹52,670 | ₹5.28 lakh |
| 60 months | ₹44,490 | ₹6.69 lakh |
Source: Illustrative only at 12% p.a. reducing balance. Your actual rate and EMI will differ. This is not a quote.
A longer tenure lowers the EMI but raises the total interest you pay. Match the tenure to your cash flow, not just the lowest monthly figure.
Tarun Plus compared with other MSME loan options
Tarun Plus is excellent for micro units that need up to ₹20 lakh. But it is not the only route, and ₹20 lakh may not cover every plan.
- Need more than ₹20 lakh? A collateral-free term loan backed by CGTMSE can go much higher — its guarantee cover has been raised to ₹5 crore.
- Want speed and flexibility? An unsecured MSME loan from an NBFC or fintech can fund up to ₹50 lakh without collateral.
- Just starting out? A Shishu or Kishore Mudra loan is a lighter first step.
Mudra loans are backed by a government guarantee under CGFMU, while larger collateral-free MSME loans are typically covered under CGTMSE. Choose the option that matches your amount, timeline and eligibility — and always compare the effective cost, not just the headline rate.
Frequently asked questions
Q: Are you eligible for a ₹20 lakh Mudra loan under the new Tarun Plus category? You are eligible if you run a non-farm micro enterprise and have already taken and fully repaid a Tarun loan of ₹5–10 lakh. Applicants aged 18–65 with a viable business and a clean repayment record can apply. The ₹20 lakh Tarun Plus loan stays collateral-free.
Q: What is the difference between Tarun and Tarun Plus? Tarun covers ₹5–10 lakh for established micro units. Tarun Plus goes higher, at ₹10–20 lakh, and is reserved for borrowers who have successfully repaid a Tarun loan. It rewards a good track record with a bigger limit.
Q: Is the ₹20 lakh Mudra loan collateral-free? Yes. All Mudra loans, including Tarun Plus, are collateral-free. They carry a government guarantee under CGFMU, so lenders do not ask for security or a third-party guarantor.
Q: Which businesses can get a Mudra loan? Non-farm, income-generating micro enterprises qualify — small manufacturers, shopkeepers, traders, service providers and allied activities like dairy or poultry. Both new and existing units are covered, though Tarun Plus needs a prior Tarun loan.
Q: How long does Mudra loan approval take? It depends on the lender. Banks may take a week or two, while some NBFCs and fintech lenders move faster once your file is complete. Keeping your KYC, Udyam registration and bank statements ready speeds things up.
The ₹20 lakh Tarun Plus tier is a genuine upgrade for growing micro businesses. Check your Mudra loan eligibility, gather your documents, and compare a few lenders before you commit. Ready to fund your next stage? Explore FlexiLoans and check your eligibility in minutes with the tool above.
Sources & official references:
- MUDRA / PMMY (official) — https://www.mudra.org.in
- PIB — Mudra limit raised to ₹20 lakh (Tarun Plus) — https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2068019
- CGTMSE (collateral-free guarantee) — https://www.cgtmse.in
