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 15-35% 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.
What are the objectives of the PMEGP scheme?
- To produce employment opportunities in India’s urban and rural areas by establishing new self-employment projects, micro-enterprises and ventures.
- To facilitate self-employment opportunities for widely dispersed traditional artisans/ unemployed rural and urban youth to the degree feasible at their location.
- To generate sustainable and continuous employment for rural and unemployed youth and thereby halt their migration to urban areas.
- To boost artisans’ income-earning capacity and spur the growth rate of both rural and urban employment.
How much subsidy can you get through the PMEGP loan scheme?
|Beneficiary categories||Beneficiary’s share (of total project)||Subsidy rate (from govt.) – Urban||Subsidy rate (from govt.) – Rural|
What is the PMEGP loan limit?
The PMEGP loan limit is Rs. 9.5 to Rs. 23.75 lakh. The maximum project cost for the manufacturing sector is capped at Rs. 25 lakh and capped 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 actuality, your bank credit will amount to only 60% to 75% of the project’s cost as you receive the remaining 15 to 35% as margin money through the PMEGP scheme. Banks provide the balance amount of the project’s cost 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, CGTSME 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%.
What are the main PMEGP loan details?
- Banks sanction funding up to 90% 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 tenor 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, and a business/ service sector 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.
What are the documents required when making a PMEGP loan application?
Here are some documents you may need to produce when applying for the PMEGP loan scheme:
- Aadhaar card
- PAN card
- Project report
- Special category certificate, if required
- Rural area certificate
- Education/ skill development training/ EDP certificate
- Authorization letter
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.