For those who want to set up their startup, one requires some type of substantial financial help. But everyone knows that getting a loan for business from a bank is not quite easy that too from a highly secured source. So, to ease such difficulties, the Indian Government came up with the PMEGP Scheme. To get PMEGP loan one is required to fulfill various formalities before one can apply for the PMEGP or Prime Minister’s Employment Generation Programme.
Below are the details related to the PMEGP scheme.
What is the PMEGP scheme?
PMEGP or Prime Minister’s Employment Generation Programme is a kind of credit linked Programme that offers subsidies to various businesses. It was introduced in 2008 by the Indian Government and then current Prime Minister Dr. Manmohan Singh. The PMEGP scheme consists of two schemes which was Rural Employment Generation Programme and the Prime Minister’s Rojgar Yojna. Later these two schemes were merged into one which is known as the PMEGP scheme.
This program facilitates generation of various self-employment opportunities by using micro enterprise companies in the non-agricultural sector by aiding various traditional artisans and unemployed youth.
In this PMEGP scheme, the beneficiaries get a 15-35% subsidy from the government on their project cost. The PMEGP scheme is an initiative to improve employment conditions by the Ministry of Micro, Small and Medium Enterprises. It is being implemented nationwide by the KVIC or Khadi and Village Industries Commission. The PMEGP scheme gives the entrepreneurs financial assistance to the beneficiaries as required by them for setting up a new institution. The beneficiary under the scheme needs to invest around 5-10% of their total project cost while the Indian Government offers a subsidy of around 15-35% of the total project which is based on many different criteria.
What are some of the objectives of this PMEGP scheme?
The objectives of the PMEGP scheme are as follows
1. For producing various employment opportunities in the urban as well as the rural areas in various parts of India for establishing some new self-employment startups, ventures and micro-enterprises.
2. To facilitate new employment opportunities to the widely dispersed artisans or traditional unemployed urban and rural youth to the extent feasible by a company, at any location.
3. For generating continuous and sustainable employment for the unemployed and rural youth along with traditional and prospective artisans. Thereby, stopping the rural youth from going to the urban areas.
4. For boosting the artisan’s money earning capacity and also aiding in spurring the rate of growth of both urban as well as rural employment.
Subsidy which one can get using the PMEGP loan scheme
Below is a table which tells the subsidy a person can get from PMEGP loan scheme:-
|Category of applicant||Applicant’s share on the total Project||Urban subsidy rate given by government||Rural subsidy rate given by government|
What is the loan limit of the PMEGP loan scheme?
The PMEGP scheme loan limit is between Rs. 9.5 lakh and Rs.23.75 lakh. The cost of the project for any manufacturing industry is capped at a maximum of Rs. 25 lakh and also capped at a maximum of Rs. 10 lakhs for any service or business sector. The applicant needs to contribute between 5% and 10% and the remaining amount of 90 to 95% is sanctioned by the bank.
The bank would credit only 60% to 75% of the total cost of the project as the remaining 15% to 35% would be considered as the margin money that is received through the PMEGP scheme. The balance of 60% to 75% of the total cost of the project is given as the term loan.
PMEGP loan collateral requirement
The cost of the projects for up to Rs. 10 lakhs are not required to submit any kind of security as per the guidelines of RBI. For the projects that cost between Rs. 5 lakhs and 25 lakhs, the CGTMSE also provides a guaranteed collateral. The loan process for the PMEGP scheme is quite different for various projects that cost over Rs. 10 lakh as the applicant needs to offer security as per the terms of the lender.
What are the various important details of the PMEGP loan?
The following are the details of PMEGP loan:-
- Banks need to sanction the required funding of the remaining 90% to 95% of the required project cost.
- Under this scheme the government offers around 15% to 35% as the margin amount or subsidy from the PMEGP scheme.
- Apart from subsidy, the remaining amount of 60% to 75% that is offered by any bank for term loan.
- Interest rates lie between 11% and 12%.
- The repayment term is between 3 years and 7 years after the preliminary moratorium.
Who can apply for a PMEGP scheme loan?
The people who can apply for the PMEGP loan are
- Anyone who is above 18 years of age.
- The applicant must have passed a minimum of 8th standard in any board/school for this sector in manufacturing projects and it should be costing higher than Rs.10 lakh, and for a service/business sector and costing higher than Rs. 5 lakhs.
- Self Help Groups (it should also include those SHG which are falling under the BPL after it has provided the required documents that it hasn’t obtained any benefits from any other scheme)
- Institutions which are registered under Societies Registration Act of 1860
- To produce the co-operative societies and others
- Trusts which are charitable
Eligibility table for PMEGP scheme
|Rate of Interest||It can vary from from bank to bank but has to between 11% and 12%|
|Age Criteria||18 years minimum|
|Maximum Cost of Project||Manufacturing Unit – Rs. 25 lakhs|
|Service Unit – Rs. 10 lakhs|
|Subsidy on Project||15% to 35%|
|Eligible Entities||Institutions, Business owners, Charitable Trusts, Co-operative Societies & Self-Help Groups|
|Education of Applicant||8th standard passed|
What are the required documents when applying for a PMEGP application?
Here are the required documents which one is required for producing while applying for this PMEGP scheme:
- Aadhaar card
- Authorization letter
- Caste certificate
- EDP certificate
- PAN card
- Project report
- Rural area certificate
- Special category certificate, if necessary
- Skill development training
How to apply for the PMEGP scheme?
There is an online as well as offline process for applying for the PMEGP.
- For starting with the PMEGP online, visit the e-portal of the PMEGP scheme.
- Select the application form (online) for the individual’ or ‘application form (online) for non-individual.
- Complete full form by inputting details such as sponsoring agency, name, different types of activity of the business, financing bank and others.
- After completing the application form and reviewing, select ‘save data of the applicant’.
- Then click on upload documents and after uploading click on ‘final submission’ button.
- After the final submission, the applicant would get the application ID and password that would be sent to the registered mobile number.
- Step 1: Go to the portal and fill up the necessary application form by entering personal information.
- Step 2: After entering all the required information, choose the save draft option.
- Step 3: One needs to get the printout of this application form.
- Step 4: It is mandatory to submit this printout of application form to the bank branch.
- Step 5: After which the applicant needs to complete the required formalities which needs to be performed by the bank.
How can one check the application status of PMEGP Loan Scheme?
The steps for checking PMEGP loan application status are:-
Step 1: One needs to visit the PMEGP’s official website.
Step 2: One needs to click on the Registered Applicant Login Form’ for opening another page where the login and the password fields appear.
Step 3: Then enter the ID and password provided while registering and select the ‘Login’ button.
Step 4: One needs to check the status of the PMEGP scheme loan application, by clicking on the ‘View Status’.
Benefits of PMEGP
The benefits of PMEGP scheme are:-
- This scheme is available to new startups or businesses or units
- There is no such limit on income ceiling for opening new institutions
- Any sector which also includes the coir-based industries are eligible to take benefits under this scheme
- The per capita investment under the scheme investment limit in hilly areas as well as the plain areas.
- The maximum range of this is Rs 10 lakh for those in the service sector
- Rs 25 lakh is the limit for those in the manufacturing sector.
1. What is the full form of PMEGP?
The Prime Minister Employment Generation Programme is the full form of PMEGP.
2. What is the limit of the PMEGP scheme in the hilly areas?
For the hilly areas, the per capita amount in the PMEGP scheme must not be exceeding Rs. 1.5 lakh.
3. Is any collateral required for a project below 10 lakhs?
No, there is no such collateral required for projects up to Rs. 10 lakhs under this scheme. For above Rs. 10 lakh collateral is required.
4. What is the minimum age limit for applying in the PMEGP scheme?
The applicant must be at least 18 years of age.
5. Can existing units who are availing benefits under REGP or PMRY scheme avail this scheme?
No, existing units who are availing benefits under PMRY or REGP scheme cannot avail benefits of this scheme.
6. Can industries/businesses avail loan under this scheme if they have any other government subsidy?
No, industries/businesses cannot avail loan under this scheme if they have any other government subsidy. This scheme is not available for those who are getting subsidies under the Central or State government.
7. Under PMEGP, what is the highest project cost allowed?
Under PMEGP, the highest project cost allowed Rs 25 lakh for those who are manufacturing.
8. Are the margin money and Govt. subsidy same thing in the PMEGP scheme?
Yes, margin money and Government subsidy are the same thing in the PMEGP scheme. It ranges between 15% – 25% of the total project cost.
9. Who can benefit from this PMEGP scheme?
Here are some of the beneficiaries below mentioned under the PMEGP scheme:
- People above the age of 18 years
- SHGs or Self-help Groups
- Any kind of charitable trusts
- Societies which are registered under the Societies Registration Act, 1860
- People who work for production of co-operative societies
10. What is the loan interest in the PMEGP loan scheme? Does it vary?
The interest rate under PMEGP loan is between 11% and 12%. Yes, it varies from bank to bank.
11. What is the limit of the PMEGP scheme in the plane areas?
For the plane areas the per capita amount in the PMEGP scheme must not be exceeding Rs 1 lakh.
12. Can NRIs avail this scheme?
No, NRIs are not eligible under this scheme. This PMEGP scheme is available to Indians residing in India only.