PMEGP Loan: Scheme That Make Your Business Dream Come True

What Is PMEGP loan?

The PMEGP loan full form is Prime Minister’s Employment Generation Programme

The Prime Minister Employment Generation Programme (PMEGP) is a scheme backed by the Government of India, offering credit-linked subsidies. Administered nationally by the Khadi and Village Industries Commission (KVIC), it falls under the Ministry of Micro, Small, and Medium Enterprises. This initiative aims to provide financial support for entrepreneurs looking to kickstart new ventures.

Features Of PMEGP Loan Scheme

You can further understand PMEGP Loan scheme with the following loan-related details:-

• The PMEGP term loan Scheme has no income ceiling for starting projects and ventures.
• Banks allocate 90-95% of funds less 15-35% subsidy as PMEGP loan Scheme
• The rate of interest on PMEGP loan is at the regular applicable rate for the MSME sector.
• The PMEGP Loan Tenure is for 3 – 7 years including repayment years after an initial moratorium of maximum of six months.
• The government subsidy is locked in for a period of 3 years in a separate saving account before either being adjusted to the PMEGP loan or released.
• Working capital expenditure should be equal to the cash credit limit at least once in 3 years after the subsidy is locked in and utilization should not run below 75% of the sanctioned limit.

Eligibility For PMEGP Loan

Individuals and organizations can both avail the PMEGP loan scheme provided they satisfy the specified eligiblity criteria For PMEGP loan laid down by the concerned authorities. These are –

• New projects that have not availed any other scheme-related subsidy.
• Only one individual per family is eligible.
• Institutions (registered under the Societies Registration Act, 1860), co-operative societies, self-help groups, and charitable trusts.
• Must have 8th standard pass
• Projects that cost above ₹10 lakh in the manufacturing sector and ₹5 lakh in the services sector.

PMEGP Loan Interest Rates

The PMEGP loan scheme program offers annual interest rates varying from 11% to 12%. Meanwhile, the Interest Subsidy Eligibility Certificate scheme provides a lower interest rate of 4%.

The Khadi and Village Industries Commission bridges the gap between the reduced rate of 4% and the standard rate of 11% to 12%. However, this adjusted rate of 4% is exclusively applicable to enterprises involved in the production of Khadi and/or Polyvastra products.

How to Initiate For PMEGP Loan Apply Online?

The PMEGP loan sanction process is very simple. Here are few steps for PMEGP loan apply online login

• Visit the Official PMEGP portal Website:
• Click on the ‘Apply’ button under the ‘Application for New Unit’ option.
• Fill Out the Form: – Carefully complete the form that appears.
• Click on ‘Save Application Data’.
• Note Your Application ID and Password:
• Record the application ID and password displayed on the screen.
• Upload Your Documents:- Click on ‘Proceed’ to start uploading your documents.
• Click ‘Upload’ beside each document type, then ‘Choose File’ to select and upload the file from your computer.
• Complete Document Upload:- Click on ‘Upload’ to finalize each document upload.
• Repeat for all required documents.
• Check Your Loan Chances: – Click on ‘Score Card’ to understand your loan eligibility.
• Answer all questions, tick the checkbox, and click ‘Save’.
• Choose EDP Training:- Go to the ‘EDP’ section and select your training method, if not already taken.
• Final Submission:- Click ‘Final Submission’ on the menu bar.
• Select ‘Final Submission of Application to Sponsoring Agency’.
• Print Your Application:- Choose the ‘Print Application’ option.
• Print the form and attach photocopies of all uploaded documents.
• Visit the bank you chose in your form with these documents.
• Submit to the Bank:- Submit your application form and documents to the bank.
• Wait 30 to 45 days for a call from the bank regarding your application approval.

Important PMEGP loan Documents list

For PMEGP loan apply , the following documents are required:

• PAN card
• Aadhaar card
• Project report
• Class VIII pass certificate
• Address proof
• Special category certificate (if required)
• SC/ST/OBC/Minority/Ex-Servicemen certificate
• Entrepreneur Development Programme (EDP) training certificate
• Academic and technical certification

Businesses Covered Under The PMEGP Loan Scheme

• Agricultural-related product or tool manufacturing
• Research & development for agile technologies
• Recycling of bio waste products
• Agro-food processing
• Clothes manufacturing sector
• Services & Textiles
• Hand-made paper and fiber
• Polymer, and chemical-based products

How Can I Check the Status of My PMEGP Loan Application?

After completing the application process, you must check the status of your PMEGP application on a frequent basis. To easily track PMEGP loan status, follow these steps:

STEP 1: To check your ‘PMEGP loan online application status’, go to the official PMEGP website and click on the ‘Apply’ button under the ‘Registered Applicant’ section.

Step 2: The ‘Login Form for Registered Applicant’ will appear in front of you.

STEP-3: Enter your User ID and password, then click ‘Login’. If you have forgotten your password, simply click on ‘Forgot Password’ to reset it.

STEP 4: On the next screen, select ‘View Status’ for PMEGP tracking. You will be able to view the status of your loan.

Updates Related to PMEGP Loan Scheme

Explore More About: PMEGP Loan Scheme Details

Recent updates from the government have revised the limits for both sectors. Here are the latest limits and attributes of the PMEGP loan:

• A maximum limit of Rs. 50 lakh for establishing a manufacturing unit and Rs. 20 lakh for initiating a service sector business.
• Additional funds beyond these limits can be acquired from the bank as a regular loan, devoid of any subsidy.
• The special category encompassed in the scheme comprises women, SC, ST, OBC, ex-servicemen, TG, differently abled individuals, and those from aspirational districts or hilly/border regions. There are many more government schemes for women entrepreneurs.
• Margin money requirements stand at 10% for the general category and 5% for the special category.
• General category applicants initiating businesses in urban areas are eligible for a 15% subsidy, while those in rural areas qualify for a 25% subsidy.
• Special category applicants launching businesses in urban areas can avail themselves of a 25% subsidy, while those in rural areas are entitled to a 35% subsidy.
• The scheme allows for upgradation loans, enabling a second loan for the same business endeavor.
• All upgradation loans necessitate a 10% margin.
• Subsidies for upgradation loans are set at 15%, rising to 20% for populations residing in hilly or border regions.

Funding And Subsidies Offered by PMEGP Scheme

PMEGP scheme offers financial assistance to all projects in the rural and urban areas that fall under the Micro-enterprises sector. The projects are categorized under the manufacturing and services sectors. The maximum cost of a project in the manufacturing industry to be admissible is ₹25 lakh, and in the services sector, this limit is ₹10 lakh.

Additionally, any per capita investment in these businesses should not exceed ₹1 lakh in the plains and ₹1.5 lakh in the hills.

In support of this funding from the PMEGP loan (Govt), the borrower is required to make a contribution of 10% of the amount for entrepreneurs belonging to the General category and 5% of the amount for those in the categories of SC/ST/OBC, women, minorities, physically challenged persons, ex-defense employees, and people in the NorthEast region, hills, and border areas, among others.

Now, the remaining amount of the total cost of the industry project to be set up is provided by the banks in the form of term loans to the entrepreneur of the micro-unit business. This term loan is the PMEGP loan.

The rate of subsidy allotted will be 15% for the General category in urban areas and 25% in rural regions. For the special categories mentioned above, the subsidy from the government will amount to 25% for urban areas and 35% for rural ones.

The PMEGP is a central sector scheme, and beneficiaries are to be selected at the district level by a task force of the nodal agencies. In this regard, individuals who have undergone entrepreneurship and or skill development programs such as, EDP, SDP, ESDP, or vocational training can submit project applications to banks directly. A scorecard devised in consultation with SBI and RBI will form the basis for the selection.

FAQs

Do We Need Any Collateral To Apply for PMEGP Loan?

NO, This term loan for business requires no collateral security for amounts up to ₹5 lakh. Furthermore, the units that are eligible for PMEGP are covered under the Credit Guarantee Fund Scheme for Micro & Small Enterprises, with the exclusion of margin money or subsidy component.

Who Are Not Eligible For PMEGP Loan Scheme?

Any enterprise producing goods considered harmful to the environment such as plastic containers, plastic bags, etc. Here are some criteria which explain who are all not eligible for PMEGP –

• Meat slaughtering, processing, canning, etc.
• Production or manufacturing of intoxicants and tobacco-related products
• Horticulture, animal husbandry, sericulture, and floriculture
• Rural Transport

Which financial institutions lend under the PMEGP scheme?

Under the Prime Minister’s Employment Generation Programme (PMEGP), financial institutions like public sector banks, regional rural banks (RRBs), cooperative banks, and private sector banks are authorized to provide loans. The scheme is implemented by the Khadi and Village Industries Commission (KVIC), in partnership with these banks, to support small business ventures and self-employment projects.

What is the maximum age limit for PMEGP Loan?

The maximum age limit for a PMEGP (Prime Minister’s Employment Generation Programme) loan in the PMEGP loan process is 50 years for general applicants. However, for applicants from special categories like SC/ST, OBC, minorities, ex-servicemen, women, and differently-abled individuals, there may be some relaxation on age limits based on specific guidelines.

How to get PMEGP loan easily?

To get a PMEGP (Prime Minister’s Employment Generation Programme) loan easily, follow these steps:

1. Check Eligibility: You should be 18+, have a project in manufacturing or service sectors, and not have an existing business under PMEGP.
2. Prepare Documents: Gather documents like Aadhaar, PAN, project report, and any proof of your qualifications. A project report detailing your business plan is crucial.
3. Apply Online: Visit the official PMEGP e-portal, register, and submit your application with all documents.
4. Approach a Bank: After submitting, choose a bank and approach them for your loan process. Banks prefer well-prepared applications with clear project viability.
5. Follow Up: Track your application online and stay in touch with the bank and KVIC office for any additional requirements.

How to reject PMEGP Loan?

To reject a PMEGP (Prime Minister’s Employment Generation Programme) loan, you should issue a formal letter explaining the reasons for rejection. Common reasons might include ineligibility based on program criteria, insufficient or incomplete documentation, lack of a viable project plan, or a low credit score.

Be clear and concise, providing specific feedback if possible, so the applicant understands the grounds for rejection and may address these areas for future applications.

How to fill PMEGP score card?

To fill out the PMEGP score card, follow these steps:

1. Personal and Business Details: Enter personal information (name, address, education) and details of your business (type, sector, location, etc.).
2. Financial Information: Fill in the capital and loan requirements, project cost, and subsidy details if applicable.
3. Employment and Project Details: Mention the number of people employed, type of employment generated, and project timeline.
4. Project Viability: Score the project on its feasibility, profitability, and potential for job creation. Provide details on expected income, expenditures, and repayment capabilities.
5. Supporting Documents: Attach documents such as a business plan, financial projections, and any certifications required.

Each section will have a specific weightage; fill accurately as scores determine the approval and subsidy level.

How to repay PMEGP loan?

To repay a PMEGP loan, follow these steps:

1. Understand the Repayment Terms: Review the loan agreement for details like EMI amount, repayment period, and due dates.
2. Set Up EMIs: Ensure timely payment of Equated Monthly Installments (EMIs) through automatic bank transfers or post-dated cheques.
3. Track Subsidy Adjustment: If eligible, monitor the KVIC subsidy’s adjustment to your loan account.
4. Generate Revenue: Focus on improving business cash flow and profitability to meet repayment obligations comfortably.
5. Communicate with the Bank: Inform the lender if you face financial difficulties to explore restructuring or deferment options.

Timely repayment helps build a good credit history and ensures eligibility for future loans.

How to apply PMEGP subsidy?

Here PMEGP loan scheme details are as follows:-

1. Eligibility Check: Ensure you meet the eligibility criteria (Indian citizen, aged 18+, no defaults with any bank, etc.).
2. Register Online: Visit the official PMEGP e-portal (https://www.kviconline.gov.in/pmegpeportal).
3. Fill Application: Complete the application form with personal, business, and project details.
4. Submit Documents: Upload required documents, including ID proof, project report, and caste certificate (if applicable).
5. Bank Approval: Submit your application to a partner bank, which will review the proposal.
6. Training: Attend an EDP (Entrepreneurship Development Program) if required.
7. Receive Subsidy: Upon approval, you’ll receive the subsidy directly to your bank account after loan disbursement.

For detailed guidelines, consult the PMEGP guidelines on the official website.

How to cancel PMEGP loan application?

To cancel a PMEGP (Prime Minister’s Employment Generation Programme) loan application, contact the implementing agency where you applied, such as KVIC, KVIB, or the DIC (District Industries Centre). Submit a written request for cancellation, including your application ID, reason for cancellation, and personal details. Additionally, follow up with the bank if the application has already reached the bank processing stage, as they may need to confirm the cancellation on their end.

Which business comes under PMEGP Loan?

Under the Prime Minister’s Employment Generation Programme (PMEGP), eligible businesses include manufacturing, trading, and service units, particularly those focused on creating employment. This program supports small-scale industries and activities in sectors like agriculture, food processing, textiles, handicrafts, and other small and medium-sized enterprises (SMEs).

What is PMEGP 2nd loan subsidy?

The PMEGP (Prime Minister’s Employment Generation Programme) 2nd loan subsidy is an additional financial assistance scheme for existing PMEGP beneficiaries. Under this, eligible entrepreneurs can avail of a second loan of up to ₹1 crore for business expansion, with a subsidy of 15% (urban) or 20% (rural) on the approved project cost. This encourages growth and sustainability for small and micro-enterprises.