PMEGP Loan – How to Apply, Eligibility, and Benefits

The Prime Minister’s Employment Generation Programme which is the PMEGP full form is a credit-linked subsidy scheme in India aimed at creating self-employment opportunities for unemployed youth and traditional artisans in both rural and urban areas. Launched in 2008, PMEGP merges two previous schemes and focuses on micro-enterprise establishments in the non-farm sector. Administered by the Ministry of Micro, Small and Medium Enterprises, the program provides financial assistance, with subsidies ranging from 15% to 35% based on the category of the applicant. Applicants need to meet certain eligibility criteria before moving to PMEGP login and provide specific documentation for registration and application on the PMEGP e-portal. The PMEGP loan scheme facilitates the provision of quick business loans at Lendingkart to entrepreneurs looking to establish or expand their ventures, thereby promoting self-employment and small businesses.

What are the objectives of the PMEGP Loan Scheme? 

The Prime Minister’s Employment Generation Programme (PMEGP) Loan Scheme aims to create sustainable employment opportunities in both rural and urban areas by establishing new self-employment ventures and micro-enterprises. By merging the Prime Minister’s Rojgar Yojana and Rural Employment Generation Programme, PMEGP targets traditional artisans, unemployed youth, and prospective entrepreneurs. The scheme facilitates the flow of credit to the micro sector, administered by the Ministry of MSMEs (Micro, Small and Medium Enterprises) and implemented by the Khadi and Village Industries Commission. Its objectives include providing continuous employment, increasing wage-earning capacity, and curbing rural-urban migration by supporting self-employment initiatives across the country. Under the PMEGP loan program, working capital loans are provided to ensure that new enterprises have the necessary funds to manage day-to-day operations and maintain liquidity.

Benefits of PMEGP

The Prime Minister’s Employment Generation Programme (PMEGP) offers a range of benefits aimed at fostering self-employment and economic growth in India. Through PMEGP, individuals can access versatile business finance, including cash credit for working capital needs and term loans for capital expenditure. The scheme provides subsidies ranging from 15% to 35% of the project cost, easing repayment pressures and promoting entrepreneurship. Additionally, PMEGP offers marketing support, local employment opportunities, and relaxed collateral requirements, empowering traditional artisans, unemployed youth, and aspiring entrepreneurs to establish micro-enterprises and contribute to sustainable employment generation in both rural and urban areas. While primarily focused on new ventures, the PMEGP loan scheme complements other initiatives like Mudra loans, offering comprehensive financial solutions to support a wide range of entrepreneurial activities.

What is the PMEGP loan limit?

The Prime Minister’s Employment Generation Programme (PMEGP) offers flexible loan limits based on the nature of the project. For manufacturing sector projects, the maximum cost admissible is Rs. 50 lakhs, while for business and service sector projects, it is Rs. 20 lakhs. The loan amount is the remaining portion of the project cost after deducting the admissible capital subsidy, which ranges from 15% to 35% depending on the category of the applicant. The maximum loan limit is Rs. 10 lakhs for business and service sector projects and Rs. 25 lakhs for manufacturing sector projects. Applicants must meet the specified eligibility criteria and provide the required documentation to avail of the PMEGP loan.

Does a PMEGP loan require collateral?

No, collateral is not mandatory for PMEGP loans up to Rs. 10 lakh as per RBI guidelines. However, for projects with costs ranging from Rs. 5 lakh to 25 lakh, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides a collateral guarantee, ensuring financial security for larger loan amounts. MSMEs can leverage PMEGP loans to access the financial support needed for growth and development, as the scheme is specifically designed to cater to the needs of micro, small, and medium enterprises – MSME loan.

What is the PMEGP loan interest rate?

The Prime Minister’s Employment Generation Programme (PMEGP) loan interest rate is charged at the normal rate, as per the guidelines. The repayment schedule typically ranges from 3 to 7 years after an initial moratorium period, as prescribed by the concerned bank or financial institution. Additionally, the scheme encourages banks to prioritise sanctioning projects under PMEGP and discourages unnecessary credit guarantee coverage.

What are the main PMEGP loan details?

The main details of the Prime Minister’s Employment Generation Programme (PMEGP) loan include banks sanctioning up to 95% of the project cost, with the government providing 15% to 30% as margin money or subsidy. The remaining 60% to 75% is financed by the bank as a Term Loan and working capital. Interest rates range from 11% to 12%, with a repayment tenure of 3 to 7 years after a moratorium period.

Who can apply for a PMEGP loan?

The Prime Minister’s Employment Generation Programme (PMEGP) loan is open to a variety of individuals and organisations that meet specific eligibility criteria. These include:

• Individuals: Must be at least 18 years of age, with no upper age limit.
• Educational Qualification: For projects costing above Rs. 10 lakh in the manufacturing sector and above Rs. 5 lakh in the business/service sector, applicants should possess at least an VIII standard pass educational qualification.
• Self-Help Groups (SHGs): Including those belonging to Below Poverty Line (BPL) provided they have not availed benefits under any other scheme.
• Institutions: Registered under Societies Registration Act, 1860.
• Production Co-operative Societies: Eligible for assistance under PMEGP.
• Charitable Trusts: Also eligible for assistance under PMEGP.

It is important to note that existing units (under PMRY, REGP, or any other scheme of Government of India or State Government) and units that have already availed Government Subsidy under any other scheme of Government of India or State Government are not eligible for PMEGP.

What are the documents required when making a PMEGP loan application?

When applying for a Prime Minister’s Employment Generation Programme (PMEGP) loan, the following documents are typically required:

• Personal Identification: PAN card, Aadhaar card.
• Residence Proof: Rural area certificate, Address proof.
• Project Details: Project report detailing the business plan.
• Special Category Certificate: For specific categories, if applicable.
• Caste Certificate: Sometimes needed for specific cases.
• Passport-sized Photographs: Usually required on the application form.
• Application Form: Duly filled with all necessary details.

These documents are essential for the loan application process under the PMEGP scheme.

How to make a PMEGP online application?

Here are the steps to make a PMEGP online application:

• Visit the official PMEGP website and click on the ‘Apply’ button under the ‘Application for New Unit’ option.
• Fill in the application form carefully and click on ‘Save Application Data’.
• Note down the application ID and password displayed on the screen.
• Click on ‘Proceed’ to start uploading the required documents. Click on ‘Upload’ beside each document type, choose the file from your computer, and click ‘Upload’ to complete the process.
• Upload all necessary documents like PAN card, Aadhaar card, residence proof, project report, special category certificate (if applicable), caste certificate (if required), and passport-sized photographs.
• Click on ‘Score Card’ to assess your chances of getting the loan, answer all questions, tick the checkbox, and click ‘Save’.
• Go to the ‘EDP’ section and choose how you want to take the mandatory entrepreneurship development training, if not already completed.
• Click on ‘Final Submission’ on the menu bar and then ‘Final Submission of Application to Sponsoring Agency’.
• Print the application form, attach photocopies of all uploaded documents, and submit it along with the application to the bank of your choice.

The application will be processed within 30-45 days, and you will be contacted by the bank if approved.

Frequently Asked Questions

What is the PMEGP loan scheme?

The PMEGP loan scheme is a credit-linked subsidy program aimed at generating self-employment opportunities for individuals in both rural and urban areas.

What is the name of PMEGP?

The name of the PMEGP scheme is the Prime Minister’s Employment Generation Programme.

Which bank gives a PMEGP loan?

Various banks participate in providing PMEGP loans, with HDFC Bank being one of the institutions offering this scheme.

How many days to get a PMEGP loan?

Typically, it takes around 30 to 45 days to process and receive a PMEGP loan after submitting the application.