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PMEGP Loan

PMEGP Scheme

Last Updated 30th Oct 2020

PMEGP is a credit-linked subsidy programme monitored by the Ministry of Micro, Small and Medium Enterprises, Government of India

Interest rate 11% to 12%
Loan limit ₹ 9.50 Lakh to ₹ 23.75 Lakh
Maximum project cost
  • Manufacturing sectors: ₹ 25 Lakh
  • Service sectors: ₹ 10 Lakh
Subsidy 15% to 35%
Tenure 3 years to 7 years
Minimum age of applicant 18
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Prime Minister’s Employment Generation Programme (PMEGP)

Prime Minister’s Rojgar Yojana and Rural Employment Generation Programme were merged into the Prime Minister Employment Generation Programme or PMEGP in 2008. The initiative was taken to encourage the objective of the previous two schemes of generating employment among youth. The scheme of 2008 has united the urban and rural approaches for setting up micro-enterprises. Hence, it contributes significantly to create job opportunities and boost the social and economic growth of the country.

At the National level, the PMEGP is implemented by Khadi and Village Industries Commission or KVIC. Multiple KVIC boards and directorates operate the scheme at state levels. The funds are disbursed to the beneficiaries through the selected banks. Under the PMEGP scheme, by investing only 5% to 10% of the total project cost, beneficiaries can avail a subsidy of up to 35%. 

Objectives of PMEGP

The PMEGP project operates with the following four objectives.

  • Set up micro-enterprises and self-employment projects in both rural and urban areas, thereby creating more employment opportunities.
  • To provide opportunities for ethnic craftsmen or artisans and unemployed youth in order to create self-employment avenues.
  • Provide sustainable employment, especially for ethnic artisans to prevent rural youth from moving to urban areas searching for work, and to ensure employment throughout the year for seasonally employed people.
  • Increase the growth rate of employment in urban and rural areas by increasing individual earning capacity.

Features of PMEGP Loan Scheme

The PMEGP extends financial assistance through the PMEGP loan scheme for encouraging micro-entrepreneurship. The key features of the scheme are elaborated below.

Loan quantum

In accordance with the Micro, Small and Medium Enterprises or MSME, the Prime Minister Employment Generation Programme has set different maximum project cost for manufacturing sectors and service sectors.

Enterprise Maximum project cost
Service sectors₹ 10 Lakh
Manufacturing sectors₹ 25 Lakh

Self-investment

The maximum limit for self-investment under the PMEGP Loan scheme has been set based on the location of the enterprise or project.

Enterprise location Maximum project cost
Plain area₹ 1 Lakh
Hilly area₹ 1.50 Lakh

Loan tenure

The PMEGP loan tenure ranges from 3 years to 7 years. Due to the current pandemic situation, the PMEGP loan providing banks have offered a moratorium period of 6 months on all loans taken under the PMEGP scheme.

Allocation

Banks fun 90-95% of the project cost based on the category of the borrower. The subsidy received from the programme is considered as margin money, and it is proportionate to the capital expenditure of the borrower.

Subsidy under PMEGP Scheme

Under the PMEGP project, beneficiaries are required to pay a minimum portion for the project cost and avail subsidy on loan taken from the banks linked with the scheme. The subsidy is decided based on the category and area to which the applicant belongs. The subsidy under this scheme is termed as margin money, and any surplus amount of the margin money is credited back to Khadi and Village Industries Commission. The subsidy rates under the PMEGP scheme are furnished in the following table.

CategoryShare of the beneficiary (portion of the total project cost) Share provided by the bank (portion of the total project cost)Subsidy rate
Urban area Rural area
General10%90%15%25%
Special5%95%25%35%

The special category under PMEGP scheme includes SC, ST, OBS, minorities, ex-servicemen, physically disables and individuals living in hilly and border areas.

PMEGP Loan Interest Rate

The interest rates under the PMEGP loan scheme range from 11% to 12% per annum. However, the Interest Subsidy Eligibility Certificate scheme grants concessional interest rates of 4%. This gap between the modified interest rate of 4% and the regular interest rate of 11% to 12% is adjusted by the Khadi and Village Industries Commission. However, the adjusted interest rate of 4% is available for enterprises dealing with Khadi and/or Polyvastra products only.

Eligibility Criteria for PMEGP Loan

Before applying for the PMEGP loan facility, let’s check out who falls in the eligibility list as per the guidelines of PMEGP.

  • Applicants aging at least 18 years.
  • Applicants with minimum educational qualification of VIII standard.
  • Self-help groups not availing the benefits of any other social welfare scheme.
  • Charitable trusts
  • Societies registered under Societies Registration Act of 1860
  • Co-operative societies involved in the production business.
  • Loan facility is available for new ventures only.

How to make PMEGP Application

One can make PMEGP applications on the official portal of the Prime Minister Employment Generation Programme for both individual and non-individual applicants. Follow these steps and make your application seamlessly.

  • Land on the official KVIC website of PMEGP, https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp.
  • Once on the home page, tap on either ‘Online Application form for Individuals’ or on ‘Online Application form for Non-individuals’. You can copy and paste this URL in another tab ‘https://kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp’ to directly access the form for individuals.
  • Once the form has been accessed, fill it up with the required details.
  • Click on ‘Save applicant data’ and the file will be saved.
  • Upload the required documents and submit them together with the form.
  • After successful submission, an acknowledgment ID and password will be sent to the registered mobile number of the applicant.

For non-individual applicants, there is an additional step required. After landing on the official website and taking the option of ‘Online Application form for Non-individuals’, the applicant has to select a category from ‘Self-help Groups’, ‘Trust’, ‘Regd. Institutions’ and ‘Co-operative Societies’. The component of the forms of the above-mentioned categories will vary.

Tips to Get PMEGP Loan Succesfully

Keep the following in mind to get a PMEGP loan successfully.

  • Finalize the business idea
  • Identify the location, plant and other details
  • Create an efficient project report
  • Select the correct form as per individual and non-individual status
  • Upload all required documents.

PMEGP Project Profile Example

Based on various projects, the Indian Government has published profiles of various businesses which are covered under the PMEGP. In these profiles, you can find complete information about a business in the concerned field. From market potential to technical aspect of making a product, and from capital investment to means of procuring the finance along with allocation is given in the project profile.

You can view the details of various projects profiles and its examples on any of the following website:

  • Website of KVIC (Khadi and Village Industries Commission), or use this URL - https://www.kviconline.gov.in/pmegp/pmegpweb/docs/jsp/newprojectReports.jsp.
  • Website of MSME (Micro, Small and Medium Enterprises), or use this URL - http://www.dcmsme.gov.in/publications/pmryprof/content.html.

FAQs

Which business comes under PMEGP?

Following business comes under PMEGP:

  • Food processing units using agriculture-based products as raw materials
  • Forest-based products
  • Mineral, chemical, polymers-based products
  • Handmade fibers and paper
  • Textile products
  • Biotechnology
  • Service
  • Rural engineering.

Is PMEGP collateral-free?

According to the RBI guidelines, an enterprise with a project cost up to ₹ 10 Lakh is collateral-free. Furthermore, CGTSME provides collateral security to projects ranging from ₹ 5 Lakh to ₹ 25 Lakh.

How long does it take to get PMEGP loan?

It takes 60 days for banks to evaluate the PMEGP loan application and sanction the amount to the beneficiaries.

What is PMEGP subsidy?

PMEGP subsidy is the financial assistance the Central Government provides on loans taken under the PMEGP scheme for encouraging micro-entrepreneurship.

Under the PMEGP scheme, is there a provision for borrowers proposing multiple units?

Under the provision of the PMEGP scheme, borrowers are allowed only one unit.


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