Quick Read
- PMEGP provides credit-linked subsidy aid to eligible applicants who intend to set up a new business in the form of a micro-enterprise.
- In order to be eligible for the scheme, candidates have to satisfy certain criteria such as their age, educational qualifications, the amount of money involved in the project, and the type of business activity that is proposed.
- Applicants can apply online, submit the required documents, and have their project approved by both the relevant agencies and the bank.
- The subsidy could be availed by the beneficiary in terms of reducing their share in the cost of an eligible project based on the terms and conditions of the scheme.
A business idea may be ready for take-off, but the funds necessary to transform it into an actual working enterprise may be scarce. Be it machines, raw materials, or a place to set up shop, there are many expenses that have to be met before the first sale is made. Aspiring entrepreneurs, especially those with plans for a micro-enterprise, may wish to explore the credit-linked subsidy assistance provided by the PMEGP loan scheme, as it provides government aid to budding businesspeople.
What is a PMEGP Loan?
A PMEGP loan is a bank loan that is subsidised by a government margin of money under the Prime Minister’s Employment Generation Programme (PMEGP). This scheme encourages eligible entrepreneurs to start new microenterprises and promote self-employment in rural and urban areas. The bank approves and finances the loan, whereas an eligible subsidy is provided under the PMEGP scheme.
What are the PMEGP Loan Benefits?
The prime benefits of the PMEGP loan scheme include government subsidy on the loan amount, project financing, and lower contribution norms. The salient benefits are as follows:
- Project financing: The scheme covers financial assistance up to ₹50 lakh to manufacturing projects and up to ₹20 lakh to business or service projects.
- Government subsidy: The subsidy amount varies from 15% to 35% depending on the category of the applicant and location of the project.
- Lower own contribution: The beneficiary contribution varies from 10% for the general category to 5% for the special category.
- Employment support: The scheme promotes self-employment and employment generation through creation of new micro-enterprises.
Who is Eligible for a PMEGP Loan?
The PMEGP loan eligibility criteria are based on the applicant and the project, as well as the proposed activity. The essential eligibility criteria for a new enterprise include:
- The applicant should be above 18 years of age
- There is no upper limit on the income of the beneficiary
- For a project costing more than ₹10 lakh in manufacturing and more than ₹5 lakh for business/service, the candidate should have passed the 8th standard
- The project should be a new project and should not be classified under the negative list of activities
- Only one person per family will be eligible for assistance for setting up a new enterprise under PMEGP
How to Apply for a PMEGP Loan Online?
The PMEGP loan online application can be applied for through the official PMEGP e-portal. The candidate needs to provide their personal, project, and bank details along with uploading the required documents.
- Visit the official PMEGP e-portal
- Click on ‘Apply’ for a new PMEGP project
- Fill in the required personal and project details
- Give the bank details and upload the required documents
- Submit the application and save the acknowledgement details
What Documents are Required for a PMEGP Loan?
The documents needed for applying for a PMEGP loan may vary depending on the applicant and the type of project. Some of the documents that are commonly needed include the following:
- Aadhaar and PAN
- Address and other KYC documents
- Category certificate, if applicable
- Project report and cost estimates
- Bank details
- Documents related to your intended business
What is the PMEGP Loan Subsidy?
The PMEGP financial assistance is given from 15% to 35% of the eligible project cost, depending on the category of the applicant and the location of the project.
| Applicant category | Urban | Rural |
| General | 15% | 25% |
| Special | 25% | 35% |
The subsidy is given in the form of margin money and is to be used subject to applicable PMEGP guidelines. The special category comprises eligible persons like SC, ST, OBC, women, and other categories specified under the scheme.
Summing Up
A PMEGP loan can help cover the costs of starting a new micro-enterprise. But once the business is running, there can be other expenses to manage, such as buying inventory, handling working capital, or paying for day-to-day operations.
At Lendingkart, we offer eligible business owners collateral-free business and MSME loans with a digital application process and minimal documentation, subject to eligibility and verification. This can give businesses access to funds for ongoing needs such as inventory, working capital, expansion, and regular business expenses, separately from the funding received under PMEGP.
Frequently Asked Questions (FAQs)
1. What is a PMEGP loan?
A PMEGP loan is a credit facility in the form of bank financing to the extent of margin money subsidy under the PMEGP scheme. The scheme is for providing support to eligible new micro-enterprises in the non-farm sector.
2. What is the maximum PMEGP loan amount?
The maximum amount of the project for manufacturing projects has been fixed at ₹50 lakh, and for business/service projects, it is ₹20 lakh. The eligible project cost will be based on the project/your contribution/subsidy and the bank’s appraisal.
3. How much subsidy is available under PMEGP?
The amount of the subsidy for new enterprises is between 15 and 35% of the cost of the eligible project, based on the category of the applicant and the location (urban or rural) of the project.
4. Can I apply for PMEGP online?
Yes, if you are eligible, you can apply for a PMEGP loan online using the official PMEGP e-portal. You will need to upload the necessary information and documents.
5. Is PMEGP available for existing businesses?
The new-enterprise component is meant for new projects. However, eligible existing PMEGP/REGP/MUDRA units can apply for a separate second loan for upgradation, subject to the prescribed conditions.
