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Understanding & Applying Mudra Loans For Kirana Shops

Updated: Nov 14

The MUDRA loan, which is part of the Pradhan Mantri MUDRA Yojana (PMMY), is a specialised financing initiative designed by the Government of India to help micro and small businesses across the country.

Unlike a traditional loan, which may be used for a variety of purposes such as personal, educational, or significant commercial investments, MUDRA loans are only available to non-corporate small business sectors and grant credit of up to 10 lakh INR. These loans normally don’t require any collateral and have lower interest rates in comparison to private loans.

Furthermore, MUDRA loans are divided into three categories for distinct stages of business development: 'Shishu,' 'Kishor,' and 'Tarun,' a structure not seen in traditional banking loans.

Eligibility Criteria for Mudra Loan for Kirana Shop

To qualify for a Mudra Loan for your Kirana shop, you must:

  • Be a citizen of India.

  • Have a business plan for a non-farm income-generating activity in trading, manufacturing, or services.

  • Require a loan amount of up to 10 lakh INR.

Steps to Apply for Mudra Loan

1.Prepare a Business Plan

Before approaching any bank, you need to have a clear business plan for your Kirana shop. This should include details about the products you plan to sell, your target market, pricing strategies, and projected financials. A solid business plan can increase your chances of loan approval.

2. Choose the Right category of loan

Based on your requirements and business stage, choose the right Mudra loan category:

  • Shishu: For businesses that require up to 50,000 INR.

  • Kishore: For businesses that need financial assistance ranging from 50,000 INR to 5 lakh INR.

  • Tarun: For well-established businesses that require funds between 5 lakh INR and 10 lakh INR.

3. Approach a Bank or Financial Institution

Mudra loans are offered through various banks, Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs), and other financial intermediaries. Visit the nearest bank or financial institution to get details about the application process.

4. Documentation

Prepare the necessary documents, which typically include:

  • Business plan

  • Application form

  • Passport-size photographs

  • Identity proof (Aadhaar, PAN card, etc.)

  • Address proof (Utility bills, rent agreement, etc.)

  • Business address and tenure proof

  • Caste certificate (if applicable)

5. Fill out the Application Form

Complete the Mudra loan application form (which can be downloaded from the Mudra website or obtained from the bank) and submit it along with your business plan and all other required documents.

6. Follow Up

After submission, follow up with the bank for the status of your application. Banks typically process Mudra loan applications within a few weeks.

Benefits of a Mudra Loan for Kirana Shop

  • Collateral-Free Loans: One of the major benefits of a Mudra loan is that it doesn’t require any collateral. This makes it easier for small shop owners to access credit.

  • Competitive Interest Rates: Mudra loans are known for their relatively lower interest rates compared to other commercial loans, making them an affordable option for Kirana shop owners.

  • Simplified Procedure: The application process is designed to be simple and straightforward, encouraging small business owners to apply.

  • Promotes Entrepreneurship: By providing financial assistance, the Mudra loan scheme promotes entrepreneurship at the grassroots level.

  • Flexible Repayment Tenure: Borrowers can benefit from a flexible repayment tenure, which can ease the financial pressure and help them focus on growing their business.


A Mudra loan can be a game-changer for aspiring Kirana shop owners. By following the steps outlined above and meeting the eligibility criteria, you can tap into this resource to kick-start or expand your business. Remember to prepare a robust business plan, understand the loan categories, and have all your documents in order to ensure a smooth application process. With the right approach, a Mudra loan can provide the financial foundation necessary for your Kirana shop to thrive in a competitive market.

Tap into the potential of your business by getting in touch with Kirana Friends. You can connect with a Kirana Expert by calling or messaging us on 8010442222.

You can also download the Kirana Friends Application from the Google Play store by clicking on the link below and learn how to run your store more profitably.

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