PMMY Offers Collateral-Free Loans for Small Businesses across Four Categories

New Loan Scheme for first-Time Entrepreneurs announced in Union Budget 2025-26

In Union Budget 2025-26, the government raised MISS loan limit for KCC borrowers from ₹3 lakh to ₹5 lakh

Jan Samarth Portal: One-Stop Digital Platform for Easy access to 15 Government Loan Schemes

The Government runs many credit Schemes for small traders, farmers and startups. The details of few of these schemes are mentioned below.

Pradhan Mantri Mudra Yojana (PMMY) 

It provides collateral-free institutional credit through Member Lending Institutions (MLIs) i.e. Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).

Any individual, who is otherwise eligible to take a loan and has a business plan can avail loan under the Scheme. The loan is available for income generating activities in the manufacturing, trading, services sector and also for activities allied to agriculture across four loan products, viz. Shishu (loans up to Rs. 50,000), Kishore (loans above Rs. 50,000 and up to Rs. 5 lakh) and Tarun (loans above Rs. 5 lakh and up to Rs. 10 lakh).  Loans upto Rs. 20 lakh under Tarun Plus category are given to those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.

Stand Up India (SUPI)

The objective of the Scheme is to facilitate loans from Scheduled Commercial Banks (SCBs) of value between Rs. 10 lakh and    Rs. 1 crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and one Woman borrower per bank branch for setting up greenfield enterprise in manufacturing, services or trading sector, including activities allied to agriculture.

Under both the Schemes, the prospective borrowers may avail the loan for trading, activities allied to agriculture and for new business.

As per para 32 of Union Budget 2025-26 “A new scheme will be launched for 5 lakh women, Scheduled Castes and Scheduled Tribes first- time entrepreneurs. This will provide term loans upto Rs.2.00 crore during next 5 years.  The Scheme will incorporate lessons from successful Stand Up India Scheme.  Online capacity building for entrepreneurship and managerial skills will also be organized.”

Kisan Credit Card (KCC)

Kisan Credit Card (KCC), introduced in 1998, is a banking product that provides farmers with timely and affordable credit for purchasing agricultural inputs such as seeds, fertilizers, and pesticides, as well as for meeting cash requirements related to crop production and allied activities.  In 2019, the KCC scheme was extended to cover the working capital requirements of allied activities, viz. Animal Husbandry, Dairy and Fisheries.

Government of India under Modified Interest Subvention Scheme provides Interest Subvention of 1.5% to banks for providing short-term working capital loans upto Rs. 3 lakh at 7% p.a. Further, a Prompt Repayment Incentive of 3% is also provided to farmers on timely repayment of loans. Therefore, effective interest rate for farmers is 4%. In the Union Budget 2025-26, the Government has announced to enhance loan limit under the MISS from Rs. 3 lakh to Rs. 5 lakh for loans taken through the KCC.

The Jan Samarth portal is a one-stop digital platform for linking fifteen Government-sponsored loans and subsidies Schemes. It provides a quick and efficient way to apply for loans and obtain approvals based on a digital evaluation of the applicant’s data. Further, many Banks and financial institutions have developed online platforms and mobile apps for end to end digital processing of loan applications, reducing the need for physical paperwork and in-person visits.   

This information was given by Minister of State in the Ministry of Finance Shri Pankaj Chaudhary written reply to a question in Rajya Sabha today.