MUDRA vs NBFCs: Hero FinCorp or Muthoot Fincorp — Which Loan Is Right for You?
- PehchanPe Team
- March 10, 2026
- 03 Mins read
- Loans , Government Schemes
When you are looking for a business loan under ₹15 lakh, you broadly have two paths: a government-scheme loan under the MUDRA umbrella, or a direct NBFC loan from a lender like Hero FinCorp or Muthoot Fincorp. Each has genuine advantages depending on your situation.
This guide cuts through the jargon so you can make the right call before you apply.
MUDRA: Pradhan Mantri MUDRA Yojana
MUDRA stands for Micro Units Development and Refinance Agency. Launched in 2015, the scheme is specifically for micro and small non-farm businesses with loans under ₹10 lakh.
The three MUDRA tiers
| Tier | Loan Range | Target |
|---|---|---|
| Shishu | Up to ₹50,000 | Very early stage or first-time borrowers |
| Kishore | ₹50,001 to ₹5 lakh | Growing businesses with some track record |
| Tarun | ₹5 lakh to ₹10 lakh | Established micro enterprises |
How to access MUDRA loans
MUDRA does not lend directly to businesses. It refinances banks, NBFCs, and microfinance institutions, which then lend to you. When you apply to a participating lender and they approve your loan under the MUDRA umbrella, you receive a MUDRA card for accessing working capital.
Who benefits most from MUDRA?
- First-time borrowers with no existing credit history
- Businesses in the informal sector looking to formalise
- Borrowers who need working capital in small tranches
- Vendors, service providers, and traders in urban and semi-urban areas
Interest rates
MUDRA loans are priced at market rates. There is no interest subsidy attached to the scheme itself, though some state-level programmes combine MUDRA eligibility with interest subvention.
Hero FinCorp: Fast Business Loans with Daily Repayments
Hero FinCorp is one of India’s leading NBFCs and a lending partner on PehchanPe. It specialises in business loans for micro and small enterprises, with a particular focus on borrowers who prefer daily repayment structures.
Key products
Business Loan: ₹50,000 to ₹15 lakh, flexible tenure. No collateral required for loans in the lower range. Applications are processed at your doorstep with minimal paperwork.
Daily Repayment Structure: Repayments start from around ₹200 per day, making it easier to manage cash flow without setting aside a large monthly EMI. There is no foreclosure penalty, so you can repay early if business is good.
Who benefits most from Hero FinCorp?
- Borrowers with some existing credit history who are ready to step up from a microfinance loan
- Businesses with regular daily revenue (retail, trading, food service)
- Borrowers who want doorstep processing without visiting a branch
- Those looking for a larger loan than MUDRA Kishore typically provides
Muthoot Fincorp: Gold Loans and Microfinance
Muthoot Fincorp is one of India’s most trusted NBFCs and another PehchanPe lending partner. It is best known for gold loans but also offers microfinance and MSME business loans across thousands of branches nationwide.
Key products
Gold Loan: If you have gold jewellery at home, Muthoot can disburse a loan against it almost instantly, starting from ₹3,000. The process takes under 30 minutes in a branch. Interest is charged only on the amount and duration used.
MSME Business Loan: Up to ₹10 lakh for established micro and small enterprises, without needing to pledge gold. Suitable for borrowers with Udyam registration and 12 or more months of banking activity.
Microfinance Loans: Ranging from ₹10,000 to ₹75,000 for informal entrepreneurs, disbursed through joint liability groups or individual loans depending on the borrower’s profile.
Who benefits most from Muthoot Fincorp?
- Borrowers who own gold and need fast liquidity without affecting their business credit file
- First-time borrowers accessing the microfinance ladder
- Small traders and entrepreneurs in semi-urban and rural areas close to a Muthoot branch
- Borrowers rebuilding credit who want a low-risk starting product
Side-by-side comparison
| MUDRA | Hero FinCorp | Muthoot Fincorp | |
|---|---|---|---|
| Maximum loan | ₹10 lakh | ₹15 lakh | ₹10 lakh (₹3K+ for gold) |
| Collateral needed | No | No (lower range) | No (gold optional) |
| Best repayment | Monthly EMI | Daily from ₹200/day | Monthly or bullet |
| Best for | First loans, formalisation | Step-up business loans | Gold liquidity, microfinance |
| Doorstep service | Depends on lender | Yes | Branch-based |
| Available on Pulse | Yes | Yes | Yes |
How to decide
If you have never borrowed before, start with a MUDRA Shishu or Kishore loan through a participating lender, or a Muthoot Fincorp microfinance loan. Build a clean repayment record for 6 to 12 months first.
If you have gold at home and need funds urgently, a Muthoot gold loan is the fastest path to liquidity and does not require any income proof or credit history.
If you have repaid one loan cleanly and want to scale up, Hero FinCorp’s business loan with daily repayments is designed for exactly this transition, with amounts up to ₹15 lakh and doorstep convenience.
If your requirement is above ₹10 lakh, MUDRA cannot help you. Hero FinCorp is the better fit in that range for PehchanPe borrowers.
PehchanPe Pulse checks your profile against all three options simultaneously and shows you the best match for your current situation. Check your eligibility now.