Union Bank Mudra Loan: Opening Doors of Financial Empowerment to Micro-Enterprises
October 22, 2025
Pradhan Mantri Mudra Yojana (PMMY) in India provides financial support to micro-enterprises that may otherwise not have access to traditional banking avenues. Union Bank Mudra Loan is part of this initiative and allows small businesses and entrepreneurs to gain easy access to financing without collateral requirements — perfect whether starting new ventures or expanding existing ones, making achieving business goals much simpler!
We will explore the features, eligibility criteria, benefits, and application process of Union Bank’s Mudra Loan in this comprehensive guide. Additionally, we will explain the different loan types available under the Mudra scheme as well as provide helpful insights that can help you maximize this opportunity.
What is an Union Bank Mudra Loan?
The Union Bank Mudra Loan is part of the Pradhan Mantri Mudra Yojana (PMMY), an initiative by the Government of India designed to support micro-enterprises. Provided through private lenders, Mudra Loans offer working capital or long-term funds for businesses with low capital needs that may not qualify for traditional banking loans due to lack of collateral.
Union Bank Mudra Loan aims to support small business owners by offering loans with competitive interest rates and flexible repayment terms.
Types of Union Bank Mudra Loans
Union Bank of India offers three loans under their Mudra Loan scheme to meet various business financing needs — Shishu, Kishore, and Tarun loans.
1. Shishu Loan (Up to ₹50,000)
| Detail | Information |
|---|---|
| Purpose | For new businesses or startups to launch operations |
| Interest Rate | Base Rate + 1.25% |
| Repayment | Up to 36 months |
| Collateral | None required |
| Margin | Nil |
This loan is tailored towards entrepreneurs just starting out, ideal for initial funding to set up or purchase equipment. No collateral required.
2. Kishore Loan (₹50,001 to ₹5,00,000)
| Detail | Information |
|---|---|
| Purpose | For businesses looking to expand or upgrade operations |
| Interest Rate | Base Rate + 1.50% |
| Repayment | Up to 60 months |
| Collateral | Covered under CGTMSE |
| Margin | 10% |
This loan option is for businesses that have been operating for some time and wish to scale up.
3. Tarun Loan (₹5,00,001 to ₹10,00,000)
| Detail | Information |
|---|---|
| Purpose | For established businesses needing major capital expansion |
| Interest Rate | Base Rate + 1.75% |
| Repayment | Up to 84 months |
| Collateral | Covered under CGTMSE |
| Margin | 25% |
The Tarun Loan is ideal for businesses seeking to modernize or expand significantly in their respective industries.
Eligibility Criteria for Union Bank Mudra Loan
Before applying, make sure you meet the eligibility criteria. Below are the key requirements:
Eligibility Table
| Criteria | Requirements |
|---|---|
| Business Type | Micro-enterprises in manufacturing, trading, or services |
| Age Range | 21 to 65 years |
| Credit History | Clean credit history, no defaults |
| Bank Relationship | Active relationship with a commercial bank for at least 6 months |
Shishu loans are for startups, while Kishore and Tarun loans serve businesses with proven track records.
Required Documents
Here are the documents needed to apply:
| Document Type | Examples |
|---|---|
| Identity Proof | Aadhaar Card, PAN Card, Passport, Voter ID |
| Address Proof | Electricity/Water Bill (not older than 3 months), GST Registration (if applicable) |
| Financial Documents | Income Tax Returns, Bank Statements (last 6 months), Partnership Deed, MOA (for companies) |
Ensure that all documents are updated and correctly formatted to avoid delays.
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Application Procedure for Union Bank Mudra Loan
You can apply for the Union Bank Mudra Loan via online or offline methods.
Online Application Process
-
Visit the Official Website
Go to Union Bank of India’s official website. -
Select Loan Type
Choose the appropriate Mudra loan type — Shishu, Kishore, or Tarun. -
Fill Out Application
Provide accurate personal and business details. -
Upload Documents
Upload all the required documents for the selected loan category. -
Submit Application
Review, sign, and submit the application for processing.
Offline Application Process
-
Locate Nearest Branch
Visit the nearest Union Bank branch. -
Collect Application Form
Get the required form for your loan type. -
Fill the Form
Enter accurate details related to business and income. -
Submit Documents
Submit the form along with supporting documents. -
Processing
The bank will review and notify you about the loan status.
Benefits of Union Bank Mudra Loan
1. Collateral-Free Loans
Loans under Mudra are collateral-free, making it easy for small business owners to obtain financing.
2. Reasonable Interest Rates
Union Bank offers competitive interest rates starting around 10.90% annually, which are lower than typical business loans.
3. Flexible Repayment Terms
Repayment tenure ranges between 36 to 84 months, depending on the loan amount and type.
4. Support for Business Expansion
Funds can be used to purchase equipment, expand operations, or fulfill working capital needs.
5. Government-Backed Plan
Being part of Pradhan Mantri Mudra Yojana, this scheme is government-backed, which boosts lender confidence and offers better terms to borrowers.
Conclusion
Union Bank Mudra Loan offers micro-entrepreneurs an excellent way to access funding with minimal requirements and zero collateral. With competitive interest rates, long repayment periods, and government backing, it’s an ideal financial solution for small business owners aiming to grow their operations.
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