Friends, if you want to run a small business from home – like a tailoring shop, online selling, or making handmade crafts – don’t let lack of funds stop you! With micro loans from the government and banks, you can easily get a loan from ₹50,000 to ₹20 lakh, and that too without guarantee.
I checked the latest schemes for 2026, and in this post, I’ll explain which loans are best for small home businesses like yours. I’ll explain in simple steps – how to apply, how much interest, and what the eligibility is. Let’s get started so you can boost your business quickly!
What are micro loans and why should you get one?
Micro loans are designed for small businesses, like cooking and selling food from home or starting beauty services. These loans range from ₹50,000 to ₹10 lakh, without collateral (security), and have interest rates between 8-14%.
In 2025, the government made them more accessible so that women and people in rural areas can also benefit. With these loans, you can purchase inventory, buy tools, or do marketing – all without the hassle of a bank!
Top 5 Best Micro Loans for Your Home Business
Here, I’m sharing the top schemes of 2025 that are perfect for home-based small businesses. Each one’s features, eligibility, and how to apply are explained in simple terms.
1. Pradhan Mantri Mudra Yojana (PMMY) – The Easiest Option
This is the government’s most popular scheme, especially for new startups. Loans are available in Shishu (up to 50,000), Kishore (up to 5 lakh), and Tarun (up to 10 lakh) categories. Interest starts at 8.50%, and repayment is up to 5 years. Women entrepreneurs receive an extra subsidy.
Eligibility:
Indian citizen, 18+ years of age, small non-farm business (such as home baking or crafting). No credit history required.
How to Apply:
Go to the Mudra portal or your nearest bank. Documents: Aadhaar, PAN, and a simple business plan.
2. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) – Loan Without Security
This scheme provides guarantees to banks so they can provide loans without collateral. Loans up to ₹1 crore are available, with a 9-12% interest rate. Best for home businesses like catering or e-commerce.
Eligibility:
Registered MSME businesses with a turnover of less than ₹5 crore.
How to Apply:
Register your MSME on the Udyam portal, then apply to your bank. Processing can be completed in 59 minutes!
3. Stand-Up India – Special for Women and SC/STs
If you are a woman entrepreneur or belong to the SC/ST category, you can get this loan from 10 lakhs to 1 crore rupees. Interest is 10-12%, and training is also free. Ideal for home-based ventures like a tuition center or boutique.
Eligibility:
At least 51% ownership by women/SC/STs, new businesses.
How to Apply:
Apply online on the Stand-Up India portal, linking with a bank like SBI or HDFC.
4. Prime Minister’s Employment Generation Programme (PMEGP) – Subsidy Loan
This scheme is for starting micro-enterprises, which provide a 25-35% subsidy. Loan up to 25 lakh (manufacturing) or 10 lakh (service), interest 8-10%. Great for home soap making or repair shops.
Eligibility:
Unemployed youth, rural/urban, business plan ready.
How to Apply:
Apply on the KVIC website, verify with the local office.
5. MSME Loans in 59 Minutes – Super Fast Approval
A collaboration between the government and PSBs, this loan up to 1 crore is approved in 59 minutes. Interest from 8.50%, especially for startups. Quick cash for home delivery businesses or freelance services.
Eligibility:
GST registered, turnover less than 50 crore.
How to Apply:
Fill out the online form on the PSB Loans in 59 Minutes portal.
Loan Comparison – A quick look
| Scheme Name | Maximum Amount | Interest Rate (2025) | Term | Feature |
|---|---|---|---|---|
| PMMY (Mudra) | ₹10 Lakh | 8.50% – 12% | 5 years | Without Guarantee, Subsidy for Women |
| CGTMSE | ₹1 Crore | 9% – 12% | 7 years | Credit Guarantee, Fast Processing |
| Stand-Up India | ₹1 Crore | 10% – 12% | 7 years | For Women/SC/ST, Training Free |
| PMEGP | ₹25 Lakh | 8% – 10% | 5-7 Years | 25-35% Subsidy, Job Creation |
| MSME 59 Minutes | ₹1 Crore | 8.50% | to 5 Years | 59 Minutes Approval, Online |
Pros and Cons – Think before taking loan
Pros:
- You can get money without collateral – less risk.
- Low interest (8-12%) and long repayment – EMI easily.
- Subsidies and training help businesses grow quickly.
- Apply digitally in 2025 – you can do it from home.
- MSME registration also provides tax benefits.
Cons:
- Business plan and documents must be ready – little paperwork.
- Credit score is checked; if poor, rejection occurs.
- Fewer branches in rural areas, relying on online.
- Higher amounts require experience.
Conclusion
Friends, there’s no better option for starting a small business at home than micro loans like PMMY or CGTMSE – these will make your dreams a reality!
The government is making them easier in 2025, so apply now. If you’re running a home-based venture, first register as an MSME on the Udyam portal, then go to the bank. Tell us in the comments which loan you’d like to try.
