PMEGP Scheme

The PMEGP Scheme

The Prime Minister Employment Generation Programme (PMEGP) is a Government of India-backed credit-linked subsidy scheme. Under this scheme, beneficiaries can get a subsidy amounting to 15% to 35% of the project cost from the government. PMEGP is an initiative of the ministry of micro, small and medium enterprises and is implemented at a national level by the Khadi and Village Industries Commission (KVIC). As an entrepreneur, PMEGP can give you the financial assistance required to set up a new project. Read on to know more about the PMEGP scheme.

Documents required when making a PMEGP loan application

Here are some documents that you may need to produce when applying for the PMEGP loan scheme:

Aadhar

PAN card

Project report

Special category certificate, if required

Rural area certificate

Education/ skill development training/ EDP certificate

Authorisation letter

What is the PMEGP loan limit?

The PMEGP loan limit is Rs. 9.5 to Rs. 23.75 lakh. The scheme caps the maximum project cost for the manufacturing sector at Rs. 25 lakh. It caps the cost at Rs. 10 lakh for the business/ service sector. The beneficiary makes a 5 to 10% contribution, and the bank sanctions the remaining 90 to 95%.

In reality, your bank credit will only cover 60% to 75% of the project's cost. The PMEGP scheme covers the remaining 15 to 35%. Banks provide the remaining cost of the project as a Term Loan.

Does a PMEGP loan require collateral?

Projects costing up to Rs. 10 lakh do not require security as per RBI guidelines. For projects with costs ranging from Rs. 5 lakh to 25 lakh, CGTMSE provides a collateral guarantee. The PMEGP loan process is different for projects costing over Rs. 10 lakh as you may need to provide security as per your lender's terms.

What is the PMEGP loan interest rate?

Loans under the PMEGP scheme incur regular interest rates between 11% and 12%.

Objectives of the PMEGP scheme

To create jobs in India's urban and rural areas by launching new self-employment programmes, micro-enterprises, and ventures.
To the greatest extent possible, support self-employment options for widely scattered traditional artisans/ unemployed rural and urban youth.
To create long-term and consistent employment for rural and unemployed youngsters, thereby halting their migration to cities.
Increasing artisans' earning potential and accelerating rural and urban employment growth.

Main PMEGP loan details

Banks sanction funding up to 95% of the project cost
On this, the government provides 15% to 35% as margin money or PMEGP subsidy
The bank provides the remaining 60% to 75% as a Term Loan
Interest rates are regular, from 11% to 12%
Repayment tenure is 3 to 7 years after a preliminary moratorium

Who can apply for a PMEGP loan?

Here is the list of persons who can apply for funding for new projects under the PMEGP scheme.

Any individual who is above 18 years of age
The person should have passed at least the 8th standard for a manufacturing sector project costing above Rs. 10 lakh
The person should have passed at least the 8th standard for a business/service sector project costing above Rs. 5 lakh
Self-help groups (even those falling under BPL provided that the SHG has not obtained benefits from another scheme)
Institutions registered under the Societies Registration Act, 1860
Production co-operative societies
Charitable trusts

However, units already benefiting under a state or central government scheme cannot avail of a PMEGP loan.

How much subsidy can you get through the PMEGP loan scheme?

Beneficiary Categories

Beneficiary’s share
(of total project)

Urban subsidy rate

Rural subsidy rate

How to make a PMEGP online application?

To start with PMEGP online, apply via the e-portal
Click on 'online application form for individual'/ 'online application form for non-individual'
Fill out the entire form by entering details like name, sponsoring agency, type of activity, first financing bank, and so on
When done, click on 'save applicant data'
Then, upload documents and prepare for final submission
Post final submission, you will get an application ID and a password sent to your registered mobile number

The PMEGP scheme helps beneficiaries set up new projects but is nevertheless limited in its funding. To gain additional hassle-free funding without collateral, consider the Bajaj Finserv Business Loan. Here you get financing of up to Rs. 50 lakh at economic interest rates. Further, you can apply for this loan with just a few documents and get a swift 48 hours loan disbursal once your application is approved.

To streamline your application and simplify the eligibility terms, check your pre-approved offer from Bajaj Finserv. Doing so gives you a personalised deal and helps you boost your business quickly.

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