Mudra Tarun Loan Scheme 2026: Tarun & Tarun Plus Guide

The Mudra Tarun loan scheme is the top tier of the Pradhan Mantri Mudra Yojana (PMMY): Tarun covers collateral-free business loans above ₹5 lakh up to ₹10 lakh, and Tarun Plus, added after the Union Budget 2024-25, goes above ₹10 lakh up to ₹20 lakh for borrowers who have fully repaid a previous Tarun loan. It suits established micro and small businesses that need a machine, a vehicle or more working capital to grow.

This guide covers eligibility, rates, guarantee cover and the math as of October 2026. For the full scheme overview, see the pillar on business loans and Mudra loans.

Where Tarun sits in the Mudra ladder

Tenures are set by each lender. Indian Bank, for instance, lists up to 84 months for Tarun Plus term loans; other banks may differ.

What changed with Tarun Plus

The Union Budget 2024-25 announced that the Mudra limit would double from ₹10 lakh to ₹20 lakh for entrepreneurs who had availed and successfully repaid earlier Tarun loans. The Finance Ministry notified this in October 2024 by creating the Tarun Plus category, and guarantee cover for PMMY loans up to ₹20 lakh was extended under the Credit Guarantee Fund for Micro Units (CGFMU).

Two practical points follow:

• Tarun Plus is not a first loan. You must have a Tarun loan on record and have repaid it. Lenders ask for the closure certificate or loan account statement.
• The amount still depends on the project. A clean history makes you eligible, not entitled to ₹20 lakh. The bank sizes the loan to your cash flow, and some ask for a margin; Indian Bank lists 20% for Tarun Plus.

Tarun loan eligibility

• An Indian individual, proprietorship, partnership, LLP or private company running a micro or small enterprise in manufacturing, trading, services or agri-allied activities. Check the Mudra loan eligible business list for examples.
• A business track record is strongly preferred: bank statements, ITRs and financial statements for one to two years.
• No defaults with banks or financial institutions and a reasonable CIBIL score.
• The loan must be for business use, such as machinery, a commercial vehicle, shop expansion or working capital, not personal needs or housing.

A new business can technically apply for Tarun, but approval for ₹5-10 lakh without history is uncommon. Most first-timers start lower; our guide on how to apply for a Mudra loan for a new business covers that route.

Mudra loan for existing business: documents for Tarun

1. KYC of proprietor, partners or directors: PAN, Aadhaar, photographs.
2. Udyam registration, GST certificate where applicable, trade or shop licence, partnership deed or incorporation documents.
3. Business premises proof.
4. Bank statements of the business account for 6-12 months.
5. ITRs and a balance sheet and profit and loss account, often for two years.
6. Project report with quotations for the assets being bought.
7. For Tarun Plus, the closure certificate or statement of the earlier Tarun loan.

Interest rates and charges

There is no government-fixed Tarun rate. Each bank, small finance bank, NBFC or MFI prices it under its board-approved policy, usually its MCLR or repo-linked rate plus a spread based on your risk profile. Published public sector bank Mudra rates have commonly ranged from roughly 9% to 12% a year; NBFCs and MFIs typically charge more. Indian Bank, for example, prices Tarun Plus at its one-year MCLR plus 3%.

The RBI raised the repo rate to 5.50% on 7 October 2026, so benchmark-linked loans may become slightly costlier in the coming months.

Also ask about:

• Processing fee, which varies by lender for loans of this size.
• Guarantee fee: the CGFMU fee is payable by the lender, and some banks recover it from the borrower. Ask for it in writing.
• Prepayment terms for floating-rate loans.

Guarantee cover: CGFMU, not CGTMSE

Mudra loans are guaranteed under the Credit Guarantee Fund for Micro Units (CGFMU), administered by the National Credit Guarantee Trustee Company (NCGTC). That guarantee to the lender is why you do not need to pledge property or bring a guarantor.

CGTMSE is a different scheme for collateral-free loans to micro and small enterprises, with a ceiling raised to ₹10 crore from 1 April 2025. If your need outgrows ₹20 lakh, a CGTMSE-backed MSE loan is the natural next step after Tarun Plus. Our guide to government business loan schemes compares these options.

Worked example: Tarun now, Tarun Plus later

Stage 1: Tarun loan. A printing unit borrows ₹9,00,000 under Tarun for a new press at an illustrative 10% a year for 5 years (60 months).

• Monthly rate r = 10 / 12 / 100 = 0.008333
• EMI = P × r × (1 + r)^n / [(1 + r)^n − 1] ≈ ₹19,122
• Total repaid ≈ ₹11,47,340; interest ≈ ₹2,47,340

Stage 2: Tarun Plus. After repaying the Tarun loan in full, the owner wants a larger second press and borrows ₹18,00,000 under Tarun Plus at an illustrative 10.5%.

Stretching the loan from 5 to 7 years cuts the EMI by about ₹8,340 a month but adds roughly ₹2.28 lakh in interest. Choose the longer tenure only if the business genuinely needs the lower monthly outflow, and prepay when cash allows. All rates are illustrative; check actual quotes in the EMI calculator.

How to apply

1. Prepare the documents above and a project report with quotations.
2. Approach the bank that holds your business account first, since it can see your cash flows and repayment record.
3. Apply at the branch, on the bank's website, or through the government's JanSamarth portal (jansamarth.in), selecting Tarun or Tarun Plus under Business Activity Loans.
4. Go through appraisal and a site visit; read the sanction letter and Key Fact Statement before signing.

Do not pay any agent or website a fee to "process" a Tarun loan. Genuine lenders never ask for an upfront payment to release a Mudra sanction.

Key takeaways

• Tarun covers Mudra loans above ₹5 lakh up to ₹10 lakh; Tarun Plus covers above ₹10 lakh up to ₹20 lakh.
• Tarun Plus, notified in October 2024 after the Budget 2024-25 announcement, is only for borrowers who availed and fully repaid a Tarun loan.
• No collateral is needed because loans are covered by CGFMU; CGTMSE is the separate route for larger MSE loans up to ₹10 crore.
• Rates are set by each lender, typically MCLR or repo-linked plus a spread, so compare the full cost including fees.
• A longer tenure lowers the EMI but raises total interest noticeably, as the ₹18 lakh example shows.