Government Business Loans for Unemployed

To minimize unemployment problem, government of India came with the Prime Minister Rozgar Yojana (PMRY). This scheme aims to provide self-employment opportunities to 10 lakh educated unemployed youth. The basic premise of this scheme is self-employment in the rural areas, which is considered as the best means of solving the growing unemployment problem.

The main objective of this scheme is to provide easy subsidized financial assistance to the unemployed but educated youth. The sole purpose of the scheme is to start something of their own in the manufacturing, business, services and trade sectors.

There are some basic eligibility criteria set to the scheme to avail the loan. They are as follows:

Parameters	Criteria
Age	For all educated unemployed 18-35 years in general with a 10 years relaxation for SC/STs, ex-servicemen, physically handicapped and women
Education qualification	8th passed. Preference will be given to those who have been trained for any trade in Government recognised approved institutions for duration of at least six months
Family Income	The income of the beneficiaries along with spouse or of parents should not exceed Rs. 40,000/- per annum
Residence	Permanent resident of the particular area for at least 3 years
Defaulter	Shouldn’t be a defaulter to any nationalised bank/financial institutes/corporative bank. Anyone already under any government’s subsidized program won’t be eligible for this program
Activities covered	All economically viable activities including agriculture and allied activities, excluding direct agricultural operations
Project cost	Rs.1 lakh for business sector.  Rs. 2 lakh for other activities, loan to be of composite nature.
Subsidy	Subsidy will be limited to 15% of the project cost subject to ceiling of Rs. 7,500/- per entrepreneur.
Margin money	Banks will take margin money from the entrepreneur varying from 5% to 16.25% of the project cost. In total of the subsidy, the margin money equal to 20% of the project cost.
Collateral	No collateral for project up to Rs.1 lakh.
Rate of interest	Normal rate of interest shall be charged.
Repayment Schedule	Repayment schedule may range between 3 to 7 years after an initial moratorium as may be prescribed.
Training & other assistance	The training expenses and operational expenditure has to be covered within the ceiling of Rs. 2,000/- per case.
Reservation	The scheme envisages 22.5% reservation for SC/ST and 27% for Other Backward Class (OBCs). Other than that, preference should be given to the weaker sections including women.

Apart from this, Government of India has approved the introduction of a new credit linked subsidy program called Prime Minister’s Employment Generation Program (PMEGP), to generate the employment opportunities through establishment of micro enterprises in rural as well as urban areas.

The main objective of this program was to bring together the employment opportunities to the rural as well as urban sphere through setting up new self-employment ventures, projects and micro enterprises. It helps to bring up all the local traditional artisans and rural and urban youth under the program to utilise their skill into profit generating business.

Eligibility Criteria

To avail this governmental scheme, there is some pre-set eligibility criteria to meet. Those are as follows:

• Any individual above 18 years old
• The applicant has to be 8^th standard pass
• Self-help groups (including people belonging to Below Poverty Line (BPL) and not availing any other scheme) are also eligible for assistance under this program
• Existing units under any other scheme, such as PMRY, REGP or any other state/government facilitated program are not eligible for this program

Benefits

There are certain benefits offers to the unemployed youth of the urban and rural India. They are as follows:

• The maximum cost of the project under manufacturing sector is Rs. 25 lakh and under business /service sector it is Rs. 10 lakh
• Under general categories, the contribution of the beneficiaries is 10% of the project cost, where rate of subsidy given to urban people is 15% of the project cost, and for rural people it is 25%
• Under special categories (including SC / ST / OBC / Minorities / Women, Ex-servicemen, Physically handicapped, NER, Hill and Border areas, etc.), the contribution of the beneficiaries is 5% of the project cost, where rate of subsidy given to urban people is 25% of the project cost and for rural people it is 35%

Agriculture loan is very useful scheme for those unemployed individuals engaged in agriculture sectors. An unemployed agriculture graduate, aged 22 or above can apply under the scheme and start something of their own in the promising sector. Government of India thereby collaborate with many banks and NBFCs to facilitate unemployed youth in the agriculture sector under this particular scheme.

Apart from these widely attributed schemes for unemployed youth of India, there are some state based small range schemes as well available to cater the dream of the educated unemployed youth. They as follows:

• Loan Subsidy Schemes
• Cash Loans
• Secured Loan for Unemployed

Therefore, Government of India has initiated several loan schemes for the development of educated unemployed youth of the country by generating self-employment opportunities for them to start-up their own business.

FAQs

Q. Can I get a loan if I have no income?

Ans. Yes, you can get a loan on the basis of your existing CIBIL or credit score. You can also get a loan, if you use any credit card or have a fixed deposit in the bank for at least 6 months.

Q. How important is my Credit Score if I am looking to avail a loan for the unemployed?

Ans. Having a Credit score is important but maintaining a good credit is highly important and recommended, if you want a loan at lower interest rates. CIBIL score above 700 is considered good by the banks and NBFCs.

Q. What are the things I must keep in mind before availing a loan and if I am unemployed?

Ans. You need to just think about the timely repayment of your loan in the form of EMIs at defined interest rates by the bank. Failing to do so may result in heavy fines and it may even hinder any future financial help from banks, in case of default.

Q. How can an unemployed person get a loan for starting businesses without conditions?

Ans. Getting a startup loan without conditions for an unemployed person is really difficult. However, loan sanctioning is based on the sole discretion of the lender.