Top Government Loan Schemes in India (2026 Guide): Eligibility & Application

Empowering your business, home, and farming dreams in 2026.

Are you planning to start a business, renovate your home, or expand your trade in 2026? The Government of India has significantly upgraded its loan schemes this year—increasing limits (like the new ₹20 Lakh Mudra cap) and launching version 2.0 of popular housing schemes.

Here is your “Must Visit” guide to the top subsidized loan schemes available right now.

1. PM Mudra Yojana (PMMY) – Updated for 2026

The Mudra scheme remains the top choice for non-corporate small businesses. In the 2025-26 fiscal cycle, the government introduced the “Tarun Plus” category, doubling the previous loan limit for proven borrowers.

• Loan Limit: ₹50,000 to ₹20 Lakhs
• Interest Rate: 8% – 12% (Varies by bank)
• Collateral: None required.
• Categories:
  • Shishu: Up to ₹50,000 (For beginners)
  • Kishore: ₹50,000 to ₹5 Lakhs
  • Tarun: ₹5 Lakhs to ₹10 Lakhs
  • 🆕 Tarun Plus: ₹10 Lakhs to ₹20 Lakhs (For entrepreneurs who have successfully repaid a Tarun loan).

Pro Tip: Apply for Shishu loans via public sector banks for the lowest interest rates.

Read more About PM Mudra Yojana

2. PM Vishwakarma Yojana – Trending in 2026

Status: Active | Best For: Traditional Artisans (Carpenters, Tailors, Masons, etc.)

This is currently one of the most attractive schemes because it offers a fixed, subsidized interest rate that is much lower than market rates.

Eligibility: 18 traditional trades (e.g., Blacksmith, Goldsmith, Potter, Barber).

Loan Amount: Up to ₹3 Lakhs (Tranche 1: ₹1L, Tranche 2: ₹2L)

Interest Rate: Fixed at 5% (Govt pays the remaining interest as subsidy).

Key Benefits:

Collateral-free.

₹15,000 grant for Toolkits.

Stipend of ₹500/day during skill training.

3. PMAY-Urban 2.0 (Pradhan Mantri Awas Yojana)

Status: Active (New Version) | Focus: Middle Class & Urban Poor

The “Housing for All” mission has been rebooted as PMAY-U 2.0. If you are buying your first home in an urban area in 2026, this is critical.

• Benefit: Interest Subsidy of 4% (up to ₹1.80 Lakh benefit).
• Eligibility:
  • EWS/LIG/MIG: Annual family income up to ₹9 Lakhs.
  • Property Value: Up to ₹35 Lakhs.
  • Loan Amount: Subsidy calculated on loans up to ₹25 Lakhs.
• Condition: Must not own a pucca house anywhere in India.

4. Stand-Up India Scheme

Status: Extended/Active | Target: Women & SC/ST

Designed to promote entrepreneurship among the underserved. Every bank branch in India is mandated to facilitate at least one SC/ST and one Woman entrepreneur under this scheme.

• Loan Amount: ₹10 Lakhs to ₹1 Crore.
• Purpose: Setting up a Greenfield (new) enterprise in manufacturing, services, or trading.
• Margin Money: Reduced to 15% (You pay 15%, Bank covers 85%).
• Collateral: Covered under Credit Guarantee Fund (CGFSI) — no personal asset required.

5. PMEGP (Prime Minister’s Employment Generation Programme)

Status: Active | High Subsidy Scheme

If you want a loan that comes with a “discount” (subsidy) that you don’t have to pay back, this is it.

• Max Project Cost: ₹50 Lakhs (Manufacturing) | ₹20 Lakhs (Services).
• Subsidy: 15% to 35% of the project cost is given back to you as a subsidy by the government.
• Eligibility: Any individual above 18 years, VIII pass (for projects >₹10L).

Eligibility Checklist (General)

Before applying in 2026, ensure you have:

1. Udyam Registration: Mandatory for almost all business loans now. (Register free at udyamregistration.gov.in).
2. Aadhaar & PAN: Must be linked.
3. No Defaults: You must not be a defaulter (NPA) in any bank.
4. Project Report: Required for Stand-Up India and PMEGP (details of how you will use the money).

Where to Apply?

• JanSamarth Portal (jansamarth.in): The “Amazon of Loans.” Apply for 13+ government schemes on a single platform.
• Udyami Mitra: For Mudra and Stand-Up India tracking.
• Your Bank Branch: Visit the nearest PSU bank (SBI, BoB, Canara Bank, etc.) for the best compliance.

FAQs

Q. What is the new limit for Mudra Loan in 2026? A. The limit has been increased to ₹20 Lakhs under the new “Tarun Plus” category for borrowers who have successfully repaid previous loans.

Q. Is there any government loan with 5% interest? A. Yes, the PM Vishwakarma Yojana offers collateral-free loans to artisans at a fixed interest rate of 5%.

Q. Can I get a PMAY subsidy if I earn ₹8 Lakhs a year? A. Yes, under PMAY-Urban 2.0, families with an annual income up to ₹9 Lakhs (MIG) are eligible for interest subsidy.

Q. How do I apply for these loans online? A. The safest way is to visit JanSamarth.in, a government portal that checks your eligibility digitally and sends your application to multiple banks instantly.

Amit Sharma

As the Lead Analyst at Invest With Bull, Amit Sharma bridges the gap between complex banking regulations and your wallet. With a core focus on Credit Card Arbitrage and BDA Real Estate, Amit provides the data-backed analysis that salaried professionals need to maximize returns and minimize interest. He is dedicated to building financial literacy through unbiased, actionable research.

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