The four Mudra categories
| Category | Loan amount | Typical homestay use |
|---|---|---|
| Shishu | Up to ₹50,000 | Linen, mattresses, a water heater, a first set of furniture |
| Kishore | ₹50,000 to ₹5 lakh | Furnishing two or three rooms, an inverter, kitchen equipment |
| Tarun | ₹5 lakh to ₹10 lakh | Adding attached bathrooms, upgrading rooms for state classification |
| Tarun Plus | ₹10 lakh to ₹20 lakh | Bigger upgrades, for borrowers who took and repaid a Tarun loan |
Tarun Plus was added in October 2024, doubling the top limit from ₹10 lakh to ₹20 lakh (Business Standard). In the 2025-26 Budget, the government announced collateral-free Mudra credit for homestays to help people set them up across the country (Ministry of Tourism, July 2025).
What a homestay can use it for
Mudra loans are for income-earning small businesses, which includes a homestay run as a business. Lenders usually fund things that help the property earn: furniture and furnishings, bathrooms and plumbing, solar water heaters, power backup, kitchen equipment, and work needed for state registration or classification. Buying land or a house is generally outside what a Mudra loan is meant for.
Documents lenders usually ask for
Each lender sets its own list, but expect:
- Aadhaar and PAN.
- Proof of address and of your right to use the property (ownership papers or a lease).
- A short business plan: rooms, expected price per night, expected occupancy and what the loan pays for. The occupancy calculator helps with the numbers.
- Quotations for what you will buy.
- Your state homestay registration or classification certificate, if you have one. See the guides for Kerala, Karnataka and Goa.
- Udyam registration, which many lenders ask MSME borrowers for.
- For an existing homestay, bank statements and a record of past bookings and income.
How to apply
- Decide the amount and the category. Borrow for specific items with a clear return, not a round figure.
- Go to your own bank first. A lender that already sees your account history is usually quicker. Public sector banks, private banks, regional rural banks, small finance banks, NBFCs and microfinance lenders all offer Mudra loans.
- Submit the application and documents at the branch or through the lender's online application, if it has one.
- Keep records from the first booking. For a later Tarun or Tarun Plus loan, lenders will look at how the first one was repaid and how the business earns.
Interest rates and processing terms are set by each lender. Compare two or three before you sign. The official scheme site is mudra.org.in.
Showing a lender your homestay earns
A clean booking record makes a stronger case than a notebook. InnRow's reports show room nights sold, revenue, occupancy, average rate and money received for any dates, and download as CSV for your bank.
Questions hosts ask
Can I get a Mudra loan for a homestay?
Yes. A homestay run as an income-earning business can apply under the Pradhan Mantri Mudra Yojana, and the 2025-26 Budget named homestays for collateral-free Mudra credit.
What is the maximum Mudra loan for a homestay?
₹10 lakh under the Tarun category, or up to ₹20 lakh under Tarun Plus for borrowers who have taken and repaid a Tarun loan.
Do I need collateral for a Mudra loan?
Mudra loans are meant to be collateral-free, but each lender assesses the application and sets its own terms.
Can a Mudra loan be used to buy a house for a homestay?
Generally no. Mudra loans fund the business: furnishing, upgrades and equipment, not buying land or a building.