Mudra vs Stand-Up India vs PMEGP: Which Government Business Loan Is Right for You?
If you want to start or grow a business in India, the government runs three big schemes that can fund you — and they are easy to confuse. PM Mudra Yojana (PMMY) gives collateral-free loans to micro and small businesses. Stand-Up India is built for women and SC/ST entrepreneurs starting larger new ventures. PMEGP offers a loan plus an outright margin-money subsidy for new micro-enterprises.
They overlap just enough to be confusing, but each suits a very different borrower. This guide compares all three side by side so you can pick the one that fits your business, your background, and the amount you actually need.
Quick comparison
| Mudra (PMMY) | Stand-Up India | PMEGP | |
|---|---|---|---|
| What it is | Collateral-free loan for micro/small business | Bank loan for women & SC/ST entrepreneurs | Loan + margin-money subsidy for new units |
| Loan amount | Up to ₹20 lakh (in four slabs) | ₹10 lakh to ₹1 crore | Project up to ₹50 lakh (mfg) / ₹20 lakh (service) |
| Subsidy | None (it is a loan) | None (credit-guarantee backed) | Yes — 15%–35% margin-money subsidy |
| Who is it for | Any non-farm micro/small business | Women OR SC/ST, aged 18+ | New entrepreneurs, age 18+ |
| New or existing | New or existing | Greenfield (brand-new) only | New units only |
| Collateral | None | Credit-guarantee backed (per bank) | As per bank norms |
| Repayment | Per lender | Up to 7 years, moratorium up to 18 months | Per bank |
| Apply at | Bank / jansamarth.in | standupmitra.in | kviconline.gov.in |
| Best for | Small, quick, collateral-free funding | A woman or SC/ST starting a bigger venture | A new manufacturing/service unit wanting a subsidy |
PM Mudra Yojana (PMMY)
Mudra is the simplest and most accessible of the three. It gives collateral-free loans to non-corporate, non-farm micro and small enterprises through any bank, NBFC or microfinance institution. There is no property or asset to pledge, which is exactly why it works for the millions of tiny shops, stalls, repair services and small manufacturers that banks usually turn away.
The loan comes in four slabs based on the amount: Shishu (up to ₹50,000), Kishore (₹50,001 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh), and Tarun Plus (₹10 lakh to ₹20 lakh, available only to borrowers who took and fully repaid a Tarun loan). Interest is set per RBI norms and varies by lender, so it pays to compare two or three before you sign. Mudra works for both new and existing businesses across trading, services, manufacturing and allied agriculture such as dairy and poultry — but not pure crop farming.
You can apply at any bank or NBFC, or online through the Jan Samarth portal (jansamarth.in). For a full walkthrough of the slabs, documents and the step-by-step process, read our PM Mudra Yojana guide. When you are working out what your monthly repayment will look like, our EMI calculator makes it quick.
Stand-Up India
Stand-Up India is a targeted scheme to help under-represented entrepreneurs start bigger businesses. It funds a bank loan between ₹10 lakh and ₹1 crore — a composite loan covering both the term loan and working capital — for setting up a greenfield (brand-new) enterprise in manufacturing, services, trading or allied agriculture.
The catch is who can apply. The borrower must be a woman, or a person from the Scheduled Castes (SC) or Scheduled Tribes (ST), and at least 18 years old. For a business that is not a sole proprietorship, at least 51% of the shareholding must be held by a woman or an SC/ST entrepreneur. It funds only new ventures, so an existing business looking to expand should look at Mudra instead.
The terms are generous: repayment of up to 7 years with a moratorium of up to 18 months, and the loan is backed by a credit guarantee rather than your personal assets. Applications go through standupmitra.in. If you are a woman or SC/ST entrepreneur, our dedicated Stand-Up India guide covers eligibility and the application steps in detail.
PMEGP
PMEGP — the Prime Minister's Employment Generation Programme — is the only one of the three that gives you a genuine subsidy you never repay. It combines a bank loan with a margin-money subsidy of 15% to 35% of the project cost. The exact rate depends on your category and location: general applicants get less, while special categories (SC/ST, OBC, women and others) and rural areas get the higher end of the range.
It is meant for setting up new micro-enterprises only — you cannot use it to fund an existing unit. The maximum project cost is ₹50 lakh for manufacturing and ₹20 lakh for service or business units. You contribute 10% of the project cost from your own pocket if you are a general applicant, or just 5% if you fall in a special category. Applicants must be 18 or older, and for projects above certain sizes an 8th-pass educational qualification is usually required.
PMEGP is implemented by the Khadi and Village Industries Commission (KVIC), and you apply on the PMEGP e-portal at kviconline.gov.in. Because part of the project cost effectively becomes a grant, it is the most attractive option if you are starting a new unit and want to keep your borrowing — and your repayments — as low as possible.
Which should you choose?
There is no single best scheme — it depends on your situation.
- Want small, quick, collateral-free funding? Choose Mudra. If you run or are starting a modest shop, service or small unit and you need anything from a few thousand rupees up to ₹20 lakh without pledging anything, Mudra is the most direct route. It also works for an existing business that wants to grow.
- A woman or SC/ST entrepreneur starting a bigger greenfield venture? Choose Stand-Up India. When the project is brand-new and needs ₹10 lakh to ₹1 crore, this scheme's larger ticket size, long repayment and credit-guarantee backing make it the strongest fit.
- Starting a new manufacturing or service unit and want a subsidy? Choose PMEGP. It is the only one that hands you a 15%–35% margin-money subsidy, so for a new unit it lowers your real cost of capital more than a pure loan ever could.
Frequently asked questions
Can I apply to more than one scheme? You can explore more than one, but you cannot stack subsidies and loans on the same project cost. In practice you pick the one route that best fits a given venture. A common pattern is using PMEGP's subsidy to set up a new unit, then a Mudra loan later for working capital as the business grows.
Which scheme gives a subsidy? Only PMEGP. It provides a margin-money subsidy of 15%–35% of the project cost. Mudra and Stand-Up India do not give a capital subsidy — they are loans (Stand-Up India is credit-guarantee backed, but that is not a cash subsidy).
Do I need collateral? Mudra is collateral-free by design. Stand-Up India is backed by a credit guarantee rather than your assets. PMEGP follows the lending bank's norms, and the credit-guarantee cover often reduces or removes the collateral requirement — confirm with the bank.
Which is best for a woman entrepreneur? All three are open to women. Stand-Up India is purpose-built for women (and SC/ST) and offers the largest ticket size for a new venture. For a smaller or existing business, Mudra is simpler, and PMEGP gives women the higher subsidy band and a lower 5% own contribution.
Can an existing business apply? Mudra: yes — it funds both new and existing businesses. Stand-Up India: only greenfield (brand-new) enterprises. PMEGP: new units only — existing businesses are not eligible.
Find the right loan for you
The best scheme is the one that matches your business, your background and the amount you need. Estimate your monthly repayment first with our EMI calculator, then read the full PM Mudra Yojana guide and Stand-Up India guide. Not sure what you qualify for? Try our eligibility checker to see every scheme that fits your situation in a minute.
Loan terms, subsidy rates and limits change and vary by lender. Confirm the latest details on the official portals — mudra.org.in, jansamarth.in, standupmitra.in and kviconline.gov.in — before applying. This article is general information, not financial advice.