PM Mudra Loan for Hotel Business in India: Complete Guide
The Pradhan Mantri Mudra Yojana (PMMY) has emerged as one of the most important government schemes for small and medium entrepreneurs in India. Launched in 2015, this initiative aims to provide collateral-free loans to individuals and businesses engaged in non-farm income-generating activities. One of the most popular sectors availing Mudra loans is the hotel and restaurant industry.
Starting or expanding a hotel business requires significant investment in infrastructure, interiors, furniture, kitchen equipment, and working capital. However, not everyone has access to large savings or collateral to pledge for a bank loan. This is where the Mudra Loan Scheme becomes a game-changer, offering loans up to ₹10 lakh without the need for security.
In this article, we will explore in detail how much loan you can get under PM Mudra Yojana for a hotel business, eligibility criteria, documents required, application process, repayment structure, and step-by-step guidance for new entrepreneurs.
Understanding PM Mudra Yojana
The Pradhan Mantri Mudra Yojana provides loans through various financial institutions like public sector banks, private banks, regional rural banks, cooperative banks, microfinance institutions, and NBFCs. The loans are designed to promote self-employment, business expansion, and entrepreneurship in India.
There are three categories of loans under the Mudra Yojana:
- Shishu Loan (Up to ₹50,000):
Best for very small businesses such as tea stalls, canteens, or roadside food counters. - Kishor Loan (₹50,001 – ₹5,00,000):
Suitable for small and medium enterprises like fast-food restaurants, small hotels, bakeries, and catering businesses. - Tarun Loan (₹5,00,001 – ₹10,00,000):
Ideal for larger hotel businesses, multi-cuisine restaurants, lodges, or expansion of an existing setup.
How Much Loan Can You Get for a Hotel Business?
The loan amount depends on the scale of your hotel business and the category of Mudra loan you are applying for:
- Small Hotels / Lodges: If you are opening a budget hotel with basic amenities, you can apply under the Kishor Loan category for up to ₹5 lakh.
- Medium to Large Hotels: If your plan includes modern interiors, advanced kitchen equipment, and multiple rooms, you can apply under the Tarun Loan category, which allows up to ₹10 lakh.
- Street Food Outlets or Mini Cafes: If you are starting with a very small budget, you can apply under the Shishu Loan category for ₹50,000.
Banks will evaluate your business plan, expected revenue, repayment capacity, and past financial history before sanctioning the loan.
Why Mudra Loan is Best for Hotel Business Owners
- Collateral-Free: No security or guarantee is needed.
- Affordable Interest Rates: Usually between 8% – 12%, depending on the bank.
- Flexible Tenure: Repayment period can extend up to 5 years.
- Support for Expansion: Existing hotel owners can use the loan for renovation, adding more rooms, or upgrading facilities.
- Working Capital Coverage: Part of the loan can be used for staff salaries, raw materials, and monthly expenses.
Eligibility Criteria
To apply for a Mudra loan for hotel business, you must meet the following requirements:
- Age: Applicant should be between 18 and 65 years.
- Business Type: The loan is only for non-farm enterprises like hotels, restaurants, catering services, or cafes.
- Nationality: The applicant must be an Indian citizen.
- Experience: While prior experience in the hospitality sector is an advantage, even first-time entrepreneurs are eligible with a solid business plan.
- Credit History: A good repayment track record of past loans increases chances of approval.
Documents Required
When applying for a Mudra loan for hotel business, keep the following documents ready:
- Identity Proof: Aadhaar card, PAN card, Voter ID, or Passport.
- Address Proof: Ration card, utility bill, rental agreement, or property ownership papers.
- Business Proof: Business registration certificate, GST certificate, or trade license.
- Bank Statements: Last 6 months bank statement of personal and/or business account.
- Income Proof: Income tax returns (if applicable) or self-declaration of income.
- Photographs: Passport-size photos of the applicant.
- Business Plan: A detailed project report for hotel business including cost, location, expected revenue, and repayment plan.
How to Apply for Mudra Loan for Hotel Business
There are two main ways to apply: online and offline.
1. Offline Method (Bank Application)
- Visit the nearest bank branch offering Mudra loans (almost all public/private banks).
- Collect the Mudra Loan Application Form.
- Fill in details like applicant information, business details, and loan requirement.
- Attach the necessary documents.
- Submit the application along with your business plan for the hotel project.
- The bank will verify and process your request.
2. Online Method (Through Bank Websites)
- Visit the official website of the bank offering Mudra loans.
- Select Pradhan Mantri Mudra Yojana (PMMY) loan application.
- Fill out the online application form with Aadhaar, PAN, and business details.
- Upload required documents in scanned form.
- Submit and wait for bank verification.
- Once approved, the loan amount is disbursed directly into your bank account.
Example: Cost Break-Up for Hotel Business
Here’s an approximate breakdown of how a Mudra Loan can be used for a hotel project:
| Expense Category | Estimated Cost (₹) |
|---|---|
| Land/Lease Advance | 2,00,000 – 3,00,000 |
| Building Renovation | 1,50,000 – 2,50,000 |
| Furniture & Interiors | 1,00,000 – 3,00,000 |
| Kitchen Equipment | 2,00,000 – 3,50,000 |
| Staff Salaries (Initial) | 1,00,000 – 1,50,000 |
| Working Capital | 50,000 – 1,00,000 |
| Marketing & Promotion | 50,000 – 1,00,000 |
| Total | 8 – 10 lakh |
With a Tarun Loan of up to ₹10 lakh, you can cover all these expenses and launch a fully functional hotel business.
Repayment Terms
- Tenure: Up to 5 years.
- Mode of Repayment: EMI (Equated Monthly Installments).
- Moratorium Period: Some banks allow a 6–12 month grace period before EMI begins, helpful during the initial setup phase of a hotel.
- Prepayment: Most banks allow early repayment without penalty.
Tips to Improve Chances of Loan Approval
- Prepare a Detailed Project Report: Banks want to see financial viability.
- Show Stable Income Sources: Having an alternate income or savings boosts confidence.
- Maintain Good CIBIL Score: Repayment history matters a lot.
- Start Small if New: First-time entrepreneurs may start with a Kishor loan and later expand to Tarun category.
- Ensure Proper Documentation: Missing documents often delay approval.
Benefits Beyond Finance
The Mudra loan also comes with a Mudra Card, a RuPay debit card issued to borrowers. This can be used like a credit card for working capital requirements of the hotel business.
Additionally, beneficiaries get access to financial literacy programs, skill development workshops, and government handholding support for entrepreneurship.
The PM Mudra Loan Scheme is an excellent opportunity for aspiring entrepreneurs and hotel business owners in India. With loan amounts ranging from ₹50,000 to ₹10 lakh, the scheme supports businesses of all sizes — from small food stalls to large hotels.
For hotel business owners, the scheme offers financial flexibility to cover infrastructure, staff, equipment, and expansion without the burden of collateral. By preparing a strong business plan, maintaining good credit, and applying with proper documents, entrepreneurs can successfully secure funding and make their dream of owning a profitable hotel a reality.
In short, the Mudra Loan is not just financial assistance; it is a stepping stone to building a sustainable hotel business in India.