Mudra Loan Tarun Plus 2026: Up to Rs 20 Lakh for Growing MSMEs

What changed in PMMY for 2026

PMMY was launched in 2015 with three tiers: Shishu (up to Rs 50K), Kishore (Rs 50K–5L), and Tarun (Rs 5L–10L). For nine years that ceiling held.

In late 2024 the Government of India announced Tarun Plus — a new tier extending the upper limit to Rs 20 lakh for existing borrowers who have successfully repaid an earlier Tarun loan. By 2026 the scheme is operational across all major public-sector banks and most RRBs.

This piece breaks down how Tarun Plus works, who qualifies, and what your project report needs to look like.

Tarun Plus at a glance

| Parameter | Tarun (original) | Tarun Plus | | --- | --- | --- | | Loan range | Rs 5,00,001 – Rs 10,00,000 | Rs 10,00,001 – Rs 20,00,000 | | Eligibility | Any PMMY-eligible borrower | Must have successfully closed a prior Tarun loan | | Collateral | Not required (CGFMU) | Not required (CGFMU coverage extended) | | Interest rate | 9.5%–14% p.a. | 10%–14.5% p.a. | | Tenure | 5–7 years | 5–7 years | | Margin contribution | 15–25% | 20–30% | | Use of funds | Working capital + capex | Primarily expansion capex + working capital |

Who qualifies

To apply under Tarun Plus, you need to satisfy all four conditions:

1. Track record — closed an earlier Tarun (Rs 5–10 lakh) loan with 12+ months of clean repayment. Banks usually require full closure, not just current status.
2. Business continuity — same business activity (or directly related expansion). You cannot use Tarun Plus to pivot to a new sector.
3. CIBIL score — typically 720+ (some banks accept 700+ with a co-applicant).
4. Audited financials — for the latest 2 years, even if your business is below the GST threshold.

If you have never taken a Tarun loan, you cannot jump directly to Tarun Plus. The progression is Shishu → Kishore → Tarun → Tarun Plus.

Sectors prioritised under Tarun Plus

While the scheme is technically open to all PMMY-eligible activities, banks prefer Tarun Plus applications from:

• Light manufacturing units (food processing, packaging, garment manufacture, plastic moulding)
• Service businesses with scale-up potential (training institutes, healthcare clinics, IT services)
• Allied agri (cold storage, food processing, dairy expansion)
• Retail with proven turnover (kirana scaling to mini-supermarket, multi-brand outlet)

Pure trading without value addition gets sanctioned less often under Tarun Plus — banks want to see the loan funding capex or working-capital growth, not just inventory expansion.

Interest rate landscape — Tarun Plus 2026

Indicative rates from major lenders (subject to revision):

| Bank | Rate range | | --- | --- | | State Bank of India | 10.25%–13.5% | | Bank of Baroda | 10.5%–14% | | Canara Bank | 10.5%–13.75% | | Punjab National Bank | 10.65%–14.25% | | Union Bank of India | 10.5%–14% | | HDFC Bank (select branches) | 11%–14.5% |

Compare current rates and tenure options for your category with our bank-wise interest rate calculator.

Project report changes for Tarun Plus

A Tarun Plus project report differs from a regular Tarun report in five concrete ways:

1. Repayment history annexure — show the prior loan account number, sanction date, closure date, EMI track record. This is the single biggest credibility signal.
2. Year-over-year financials — actuals for last 2 years, projections for next 5 years (vs 3-year projections in Tarun)
3. Expansion plan section — what specifically the new Rs 10–20 lakh funds (machinery + working capital + premises expansion + marketing)
4. Job creation impact — how many new direct + indirect jobs the loan creates (banks treat this favourably)
5. Tax compliance proof — GST filings, ITR, EPF / ESIC compliance (if applicable)

A complete Mudra loan project report auto-generates the Tarun Plus structure when you select that category and feed in your existing loan details.

Sample Tarun Plus financial summary — manufacturing expansion

A garment-manufacturing unit that earlier took a Tarun Rs 8L loan, now applying for Tarun Plus Rs 15L:

| Year | Revenue (Rs L) | EBITDA | PAT | DSCR | | --- | --- | --- | --- | --- | | Y-2 (actual) | 32.0 | 4.8 | 2.6 | n/a | | Y-1 (actual) | 41.0 | 6.6 | 3.9 | n/a | | Y1 (projected) | 56.0 | 9.3 | 5.4 | 2.1x | | Y2 | 72.0 | 12.6 | 8.0 | 2.6x | | Y3 | 90.0 | 16.5 | 10.9 | 3.1x | | Y4 | 108.0 | 20.0 | 13.5 | 3.4x | | Y5 | 125.0 | 23.5 | 16.0 | 3.7x |

The actuals trend matters more than the projections in Tarun Plus underwriting. Banks pattern-match recent growth against the projected ramp — if your last 2 years grew at 30%, projecting 30%+ is credible; projecting 80% is not.

Documents specific to Tarun Plus

In addition to a standard PMMY pack:

• Prior loan statement showing full closure
• 24 months of bank statements (the prior loan EMI line is what they want to see)
• ITR for last 2 financial years
• GST filings for last 2 financial years (if registered)
• Audited balance sheet for last 2 financial years
• Udyam Certificate (re-issued to reflect current turnover band)
• Expansion proposal — 3–5 pages narrative + quotations

Common Tarun Plus mistakes

1. Applying with the prior loan still open — must be closed, not just regular
2. Switching banks — apply at the same bank where the prior Tarun loan was repaid; track-record visibility is the whole point
3. Pivoting to a new activity — Tarun Plus is for expansion, not new ventures
4. Underestimating margin contribution — banks routinely ask for 25–30% margin on Tarun Plus
5. Skipping the audit — even if not legally required, audited financials dramatically speed up underwriting

Decision rule

If you have an existing Tarun loan, your business is profitable, and you need Rs 10–20 lakh for genuine expansion, Tarun Plus is the right scheme. If you are growing fast and would otherwise outgrow Tarun in 12 months, plan for the upgrade now — clean closure of the existing loan + 2 years of audited books takes time to build.

If you've never taken a Tarun loan but need Rs 10–20 lakh, your alternatives are:

• PMEGP if the business is manufacturing and you're a first-time entrepreneur (subsidy benefit, slower process)
• CGTMSE-backed MSME loan — collateral-free up to Rs 2 crore, but rates are slightly higher than PMMY
• Stand-Up India for women / SC / ST applicants up to Rs 1 crore

For PMMY-specific category breakdown across Shishu, Kishore, Tarun and Tarun Plus, see the Mudra loan project report generator.

Bottom line

Tarun Plus is the natural graduation path for successful PMMY borrowers. The eligibility wall — a fully closed prior Tarun loan + clean CIBIL + audited books — keeps the cohort small and the underwriting fast. Build the file correctly the first time, and disbursement happens in 30–45 working days.