PMEGP Loan

PMEGP – Credit-linked Subsidy Program for MSMEs

PMEGP – Highlights – 2023

Interest Rate	Shall vary from lender to lender
Age Criteria	Minimum 18 years or above
Maximum Project Cost	Rs. 50 lakhs for Manufacturing Unit
	Rs. 20 lahks for Service Unit
Subsidy on Project	From 15% to 35%
Eligible Entities	Business owners, Entrepreneurs, Institutions, MSMEs, Co-operative Societies, Charitable Trusts & Self Help Groups (SHGs)
Applicant’s Education Qualification	At least 8th class pass and further as per sole discretion of PMEGP

Prime Minister’s Employment Generation Programme (PMEGP) is integrated with two earlier schemes, viz. Prime Minister Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP) were working along similar lines to generate employment among the youth.

Under PMEGP, initiated by Govt. of India, with the help of Banks offers funding assistance to set up new enterprises. The Government has come up with a few changes to the existing scheme by increasing the maximum project cost from the existing Rs Rs 10 lakh to Rs 20 lakh for service units and Rs. 25 lakhs to Rs 50 lakhs for manufacturing units.

Under this scheme, the business owners need to invest only 5%-10% of the project cost while the Government provides a subsidy of 15%-35% of the project based on different criteria. The Banks offer funds in form of Term Loan, Working Capital Loan in form of Cash Credit and Composite Loan.

The Bank sanctions 90% of the project cost in case of General Category of beneficiary and 95% in case of Special Category. However, the credit from the bank shall range between 60-75% of the total project cost whereas the rest of the sanctioned component i.e. 15-35% of the project cost is offered as margin money subsidy under the PMEGP scheme.

The loan facility can be availed in the form of term loan, working capital loan in form of cash credit facility or composite loan for financing both working capital and capital expenditure. In case of manufacturing units, working capital component of the loan cannot exceed 40% of the project cost. In case service/trading sector units, the working capital component has been capped at 60% of the project cost.

Note: As per an official statement recently, the Govt. approved the extension of the Prime Minister’s Employment Generation Programme (PMEGP) for 5 years from 2021-22 to 2025-26.

Let’s further discuss regarding PMEGP Scheme in detail:

Objectives of the Prime Minister’s Employment Generation Programme (PMEGP)

The PMEGP has primarily four-fold objectives:

• Banks offer financial assistance to set up new micro enterprises/units under PMEGP
• To create employment in rural, as well as urban areas in India by setting up new self-employment micro-enterprises or projects
• To increase the income-earning capacity of artisans and focus on increasing the growth rate of rural and urban employment
• To provide a common ground for the widely dispersed traditional artisans and unemployed youth in both rural and urban areas to come together and create self-employment avenues
• To take steps to prevent the migration of rural people to cities to seek employment by giving them stable and sustainable employment. This is especially for traditional and prospective artisans and rural and urban unemployed youth who get traditional or seasonal employment and remain unemployed the rest of the year

Quantum and Nature of Financial Assistance

The loan amount shall be forwarded in two forms as below mentioned:

Margin Money Subsidy

Funds shall be allocated towards disbursement of Margin Money for setting up of New Micro Enterprises/ Units.

Backward and Forward Linkages

5% of the total allocation shall be earmarked as funds under Backward and Forward Linkages and shall be utilised for arranging workshops, exhibitions, awareness camps, State/ District level monitoring meetings, Entrepreneurship Development Programme (EDP) training, etc.

Subsidy & Funding under PMEGP Scheme

Beneficiary Categories	Beneficiary’s Share (of Total Project)	Subsidy Rate (from Govt.) – Urban	Subsidy Rate (from Govt.) – Rural
General	10%	15%	25%
Special Categories, (including SC,ST,OBC, Minorities, Women, Ex-Servicemen, Transgenders, Differently-abled, NER, Aspirational Districts, Hill and Border areas(as notified by the Government) etc.	05%	25%	35%

Interest Rate charged by Banks under PMEGP Scheme

The interest rate and subsidy offered under the PMEGP scheme from various financial institutions shall vary from Bank to Bank and shall depend upon the applicant’s profile, creditworthiness, financial stability, repayment capability, business tenure, cost invested, and total project cost.

Loans under PMEGP can be availed by various eligible financial institutions, such as SBI, Bank of Baroda, Canara Bank, and Bank of India, as well as various other private and public sector banks.

Repayment Tenure

The repayment schedule may range between from 3 to 7 years after an initial moratorium as defined by the Bank.

Eligibility Criteria

• Minimum age of the applicant should be 18 years
• Beneficiaries shall be at least 8^th standard pass educational qualification
• Assistance available only for new projects
• No income ceiling for assistance for setting up projects under PMEGP
• The beneficiary needs to undertake mandatory EDP training to be eligible for sanction and release of loan to the beneficiary.

Eligible Entities

• Business owners and entrepreneurs
• MSMEs
• Self-help Groups (SHGs) & Charitable Trusts
• Societies that are registered under the Societies Registration Act of 1860
• Production Co-operative Societies

Note: There are no income ceilings to avail business loans under the PMEGP scheme. Loans are offered to new units and are not available for existing units established under PMRY, REGP, or any other government scheme. Moreover, any unit that has availed subsidy under any other scheme is not eligible for the PMEGP loan.

Recent Update under PMEGP Scheme

Apply for 2nd Loan of up to Rs. 1 crore under PMEGP

For the up-gradation, and expansion of existing PMEGP / REGP / MUDRA units, applicants can now apply for a 2nd Loan up to Rs. 1 crore. Applicants can also avail the Government Subsidy from 15% to 20% for the 2nd loan under the PMEGP scheme.

2^nd Loan for upgradation of existing PMEGP/ REGP/ MUDRA units

Categories of beneficiaries under PMEGP (for upgradation of existing units)	Beneficiary’s contribution (of project cost)	Rate of Subsidy (of project cost)
All Categories	10%	15% (20% in NER and Hill States)

Financial Institutions

• All Public Sector Banks
• All Regional Rural Banks, Co-operative Banks, Private Sector Scheduled Commercial Banks regulated by RBI
• Small Industries Development Bank of India (SIDBI)

The application form for PMEGP can be downloaded in pdf format from its official website or by clicking here.

Documents required

The following documents are required when applying for a PMEGP loan application:

• Duly filled application form with passport-sized photographs
• Project report
• Applicant’s Identity & Address Proofs
• Applicant’s PAN card, Aadhaar card & VIII Pass certificate
• Special category certificate, if required
• Certificate of Entrepreneur Development Programme (EDP) training
• Certificate for SC/ST/OBC/Minority/Ex-Servicemen/PHC
• Certificate of academic and technical courses, if any
• Any other document required by the Bank or NBFC

PMEGP e-portal provides access to the applicants to apply for the PMEGP registration online by filling and submitting the application form online at https://www.kviconline.gov.in/pmegp.jsp

PMEGP loan helpline number is 1800-3000-0034 and to get a state-wise contact number, applicants can visit the official website by clicking here. https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp

Further, let’s discuss regarding PMEGP online application process from which various people may be benefited.

Steps to Apply for Loan under PMEGP Scheme (Online)

The PMEGP online portal has the simplified application form for submitting application online for existing units for upgradation.

Below mentioned are the steps to apply for PMEGP Online for an individual:

Step 1: Visit the official website of PMEGP (Khadi and Village Industries Commission website) to fill out the form online or click here: https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp

Step 2: Follow the guidelines for filling out the online PMEGP application and fill in all the required details, as per your information

Step 3: After filling in all the required details, click on ‘Save Applicant Data’ to save the filled derails

Step 4: After you have saved your data you need to upload all the documents for the final submission of the application form

Step 5: Once the application is complete and submitted, the applicant’s ID number and password will be sent to his/her registered mobile number

Also Read: What is the best resource for getting small business loans?

Steps to check PMEGP Loan application status via PMEGP e-Tracking System

Step 1: Visit the official website of PMEGP or click on this link: kviconline.gov.in/pmegp/

Step 2: Click on ‘Login Form for Registered Applicant’ to open a new page where you can see login and password fields

Step 3: Enter your ID and Password and click on Login

Step 4: Finally to check the status of your PMEGP loan application, you need to click on ‘View Status’

Financial Assistance under PMEGP Scheme

The scheme offers financial assistance to people based on different criteria. However, since the scheme covers Micro, Small, and Medium-sized Enterprises (MSMEs), there are certain specifications on the number of projects that qualify and the size of the loan that is offered.

The amount of contribution required from the borrower is 10% for the General category and 5% for the Special categories, such as SC/ST/OBC, minorities, women, ex-defense employees, physically challenged persons, and people from the North East region, hills, and border areas, among others.

The rate of subsidy will be 15% for the General category in urban areas and 25% in rural regions. For the Special categories of people, the subsidy from the government will be 25% for urban areas and 35% for rural locations.

Also Read: Small Scale Industries (SSI): Registration Process, Features & Benefits

Details of PMEGP Scheme (2022-2023)

Application Received	Sanctioned by Bank	Margin Money Released
Applications received: 471918	No of Applications: 152683	No of Projects: 329349
Forwarded to Banks: 413081	Margin Money Claimed: Rs. 108953 crore	Margin Money Released: Rs. 84958 crore

Source: https://www.kviconline.gov.in/pmegpeportal/pmegphome/dashboard.jsp (Data provided till March 2023)

PMEGP Loan Disbursement and Employment Generation (FY2021-22)
Micro Units availed loans under PMEGP	84,793                             (Target: 78,625)
Employment generated	6,78,344                          (Target: 6,29,000)

Note: KVIC /KVIB /DIC /COIR have not engaged any private Party/Agency/ Middlemen/ Franchise etc. for promoting or sanctioning of PMEGP Projects or any financial assistance under PMEGP Programme and any potential entrepreneurs/beneficiaries dealing with such agency shall be doing it at their risk and consequences.

Get agency-wise full details by clicking here.

PMEGP Online EDP Training Customer Care

Find below the contact details for applicants preparing for EDP Training Online under PMEGP:

• https://www.udyami.org.in
• 07526000333 / 07526000555
• Email helpdesk@udyami.org.in

For Offline EDP Training Click here

FAQs

Q. What is the maximum project cost allowed under PMEGP?

Ans. The maximum loan limit for a project is Rs. 50 lakhs for the manufacturing unit and Rs. 20 lakhs for the service unit.

Q. Is collateral required for a loan under PMEGP?

Ans. No, collateral is not required for projects costing up to Rs. 20 lakhs under the PMEGP scheme. The CGTMSE provides a collateral guarantee for the project beyond Rs. 5 lakhs and up to Rs. 50 lakh under the PMEGP scheme.

Q. Which businesses come under PMEGP?

Ans. To check the extensive project list of businesses that come under PMEGP, you can visit the below link for information: https://www.kviconline.gov.in/pmegp/pmegpweb/docs/jsp/newprojectReports.jsp

Q. What is a PMEGP subsidy?

Ans. Prime Minister Employment Generation Programme (PMEGP) Subsidy is a credit-linked subsidy provided by the Government of India in which the beneficiary can get a subsidy of 15%-35% on the total project cost. This subsidy can be majorly availed by individuals and MSMEs across the country.

Q. How much Margin Money (Govt. Subsidy) is admissible?

Ans. The margin money is the same as the Govt. subsidy and ranges from 15% – 35% of the total project cost.

Q. Who are the beneficiaries that avail assistance from the PMEGP scheme?

Ans. The below-mentioned entities are the beneficiaries under the PMEGP scheme:

• Self-help Groups (SHGs)
• Charitable Trusts
• Societies registered under the Societies Registration Act of 1860
• Production Co-operative Societies

Q. If I am 28 years and 10th pass, can I apply for a loan under PMEGP?

Ans. Yes, applicants who are 18 years and above and have passed the VIII standard can apply for loans under the PMEGP scheme. There are no upper age limits, though banks may use their own criteria to prescribe an upper age limit.

Q. How long does it take to get a PMEGP loan?

Ans. After the training program is completed which is of around 16 days, the approximate time duration to avail loan under PMEGP from banks usually requires approximately 2 months in total.

Q. Can I get a PMEGP loan for a fast food restaurant?

Ans. Yes, you can avail loan under the PMEGP scheme to start a fast-food restaurant. If eligible you can also avail PMEGP subsidy of 90% of the total project cost offered by the Government of India. The PMEGP subsidy shall range from 15%-35%, depending upon the loan amount.

Q. Are there any education restrictions on taking a PMEGP loan?

Ans. The beneficiary must have studied and passed class 8 if they want to establish a manufacturing unit costing over Rs. 10 lakhs or a service unit costing over Rs. 5 lakhs with a PMEGP loan.

Q. Can a person living in an urban area take a PMEGP loan?

Ans. Yes, this loan scheme is available to all eligible applicants, no matter where they stay. There are certain restrictions, however, on how much subsidy one can get. For instance, the subsidy for the general category is 15% in urban areas, while it is 25% in rural. For the weaker sections of society, it is 25% in urban areas and 35% in rural.

Q. What is margin money under a PMEGP loan? How does it benefit me?

Ans. Margin money refers to the subsidy you get from the Khadi and Village Industries Commission (KVIC). It is the amount that the government contributes to your business under the PMEGP loan. This margin money is given to the bank and is subject to a lock-in period of 3 years.

Q. Will the bank give me the margin money?

Ans. Yes, the bank gives you the margin money after the lock-in period, provided you have used your funds, as per the guidelines provided by the bank.

Q. Are there any guidelines on fund utilisation?

Ans. The PMEGP loan requires that the working capital expenditure be equal to the cash credit limit at least once in the 3 years after the margin money is locked in. Moreover, it should not be less than 75% utilisation of the sanctioned limit.

Q. I do not have any working capital expenses. Will I be able to get a PMEGP loan?

Ans. Yes, you can. You need the approval of the breakup without working capital from the regional office or controller of the bank branch.

Related Post: What is Working Capital Finance?