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PMEGP Loan Scheme

PMEGP, or Prime Minister’s Employment Generation Programme, is a credit-linked subsidy scheme administered by the Khadi and Village Industries Commission (KVIC), a national-level nodal agency overlooking the development of rural MSMEs and village industries. The major objective focused on the scheme is to generate employment opportunities on several MSME fronts in rural areas. Generally, the PMEGP loan interest rates range from 11% to 12% and are catered by several banks. Applicants will be required to adhere to certain eligibility guidelines in order to avail themselves of the benefits of the PMEGP loan scheme. This piece explores various aspects of the PMEGP Loan scheme, including the eligibility criteria, interest rates, application procedure, and loan limit. 

What are the Objectives of the PMEGP Loan Scheme?

PMEGP, or Prime Minister’s Employment Generation Programme, has been launched to provide a platform for rural and urban MSMEs, village industries, and related groups to avail of financial support and aid benefits. The main objectives of the PMEGP loan scheme are explored below. 

  • To generate employment opportunities in rural as well as urban areas.
  • To provide financial assistance to new and existing micro and small enterprises.
  • To promote entrepreneurship among the youth, women, and other disadvantaged sections of society.
  • To facilitate easy access to credit for entrepreneurs.
  • To strengthen the backward and underdeveloped areas of the country.
  • To encourage the adoption of modern technology and practices in micro and small enterprises.
  • To promote sustainable and inclusive growth of the economy.
  • To reduce regional imbalances by promoting entrepreneurship in underdeveloped regions.
  • To promote the development of traditional and artisanal skills.
  • To encourage the creation of employment opportunities in the manufacturing, service, and agriculture sectors. 

What is the PMEGP Loan Limit?

The PMEGP (Prime Minister’s Employment Generation Programme) loan limit varies depending on the type of project and the category of the applicant. The maximum loan amount for manufacturing and service sector projects is Rs. 25 lakhs for the general category and Rs. 10 lakhs for the SC/ST/Women/PH category. For business loan enterprises in the retail sector, the maximum loan amount is up to Rs. 10 lakhs for the general category and up to Rs. 4 lakhs for the SC/ST/Women/PH category. However, the actual loan amount sanctioned may be lesser based on the project cost and viability.

What is the PMEGP Loan Interest Rate?

The PMEGP interest rates range from 11% to 12% per annum. Applicants will be required to attach security in the form of land, property, or any other tangible asset they possess. The collateral requirement is exempted from projects ranging up to INR 10 Lakh as per RBI guidelines. Additionally, applicants will be required to meet various eligibility criteria for further processing of the PMEGP loan. 

How Much Subsidy Can You Get Through the PMEGP Loan Scheme?

The amount of subsidy you can get through the Prime Minister's Employment Generation Programme (PMEGP) loan scheme varies depending on the nature of your project, the location of the project, and your category (General, SC, ST, OBC, Women, Minority, etc.). In general, the subsidy component can range from 15% to 35% of the project cost, with a maximum limit of Rs. 1.5 crores for manufacturing projects and Rs. 10 lakhs for service sector projects.

PMEGP Scheme Eligibility: Who Can Apply for a PMEGP Loan?

The following individuals or groups are eligible to apply for a PMEGP loan:

  • Individuals above 18 years of age
  • Self-help groups
  • Institutions registered under the Societies Registration Act of 1860
  • Production-based co-operative societies
  • Charitable trusts

It is important to note that the eligibility criteria may vary depending on the state and region of the applicant.

How to Apply for a PMEGP Loan?

The PMEGP Application process is listed in the steps provided below. 

  • Visit the Khadi and Village Industries Commission (KVIC) official website at kviconline.gov.in.
  • Click on the PMEGP Online Application link.
  • Fill in the required details such as personal information, business details, and loan amount required.
  • Upload documents such as ID proof, address proof, and business plan.
  • Once the application is submitted successfully, a reference number will be generated.
  • The concerned authorities will verify the application and sanction the loan amount.
  • The sanctioned amount will be credited to the beneficiary's bank account.

It is advisable to read and understand the eligibility criteria, terms and conditions, and other requirements before proceeding with the application process.

What are the Documents Required When Making a PMEGP Loan Application?

The documents required when making a PMEGP (Prime Minister's Employment Generation Programme) loan application may include:

  • A project report
  • Proof of Identity: Any government-issued ID card, such as an Aadhaar Card, Passport, or Voter ID.
  • Proof of Address: Any government-issued document like an Electricity bill, phone bill, or Aadhaar Card.
  • Educational qualification certificates
  • Caste Certificate
  • Bank account details
  • PAN card
  • Business plan
  • No objection certificate

What are the Main Benefits of a PMEGP Loan?

There are various benefits attached to availing of a PMEGP loan scheme. These PMEGP loan benefits are listed below. 

  • Easy Access to Funds: PMEGP loans provide easy access to funds for entrepreneurs to start their own businesses. The loan application process is simple and transparent, and the funds are disbursed quickly, allowing entrepreneurs to start their ventures without any delay.
  • Low-Interest Rates: PMEGP loans offer low-interest rates, making it affordable for entrepreneurs to start their own businesses. This ensures that the loan repayment does not become a financial burden for the entrepreneur.
  • No Collateral Required: PMEGP loans do not require any collateral, making it easier for entrepreneurs to access funds without risking their personal assets. This is a significant advantage for small business owners with no assets to pledge as collateral.
  • Credit Guarantee: The PMEGP scheme also provides a credit guarantee for the loan, which means that the government will cover a significant portion of the loan amount in case of default. This makes lending easier for banks to small businesses and reduces the risk of loan default.
  • Employment Generation: The PMEGP scheme aims to generate employment by encouraging entrepreneurship. By providing loans to entrepreneurs to start their own businesses, the scheme helps to create job opportunities and promote economic growth.
  • Skill Development: The PMEGP scheme also offers skill development training to entrepreneurs to help them develop the skills and knowledge required to run a successful business. This training helps entrepreneurs to manage their businesses more efficiently and effectively, increasing their chances of success.
  • Sustainable Development: PMEGP loans are designed to promote sustainable development by encouraging the establishment of environmentally friendly and socially responsible businesses. This helps to promote sustainable development and reduce the environmental impact of business activities.

Best Banks for PMEGP Loan

There is no definitive list of the "best" banks for PMEGP loans, as different banks may have different eligibility criteria, interest rates, and other terms and conditions. However, some of the banks that offer PMEGP loans in India include the State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, and Indian Bank, among others. It is important to compare the various options and choose a bank that meets your specific needs and requirements. 

Does a PMEGP Loan Require Collateral?

Yes, a PMEGP (Prime Minister's Employment Generation Programme) loan requires collateral. Collateral is the security or asset a borrower pledges to the lender to obtain a loan. However, per RBI guidelines, any project requiring up to INR 10 Lakhs in financial assistance does not require any security or collateral. Moreover, in the case of PMEGP loans, collateral is required to secure the loan amount, which can be land, building, machinery, or any other valuable asset. However, the amount of collateral required may vary depending on the loan amount and the nature of the business.

PMEGP Loan Customer Care Number?

You can contact the PMEGP Help Desk for any queries related to the PMEGP loan by calling on their toll-free number 1800-180-6763. Alternatively, you can email them at support.pmegp@udyogaadhaar.gov.in or visit their website.

FAQ's About PMEGP Loan

How to make a project report for a PMEGP loan?

To make a project report for a PMEGP loan, first identify the project you want to start and research the industry and market trends. Define the project’s objectives, goals, and expected outcomes. Then, create a detailed project plan, including the project’s cost, capital investment, and working capital requirements. Also, prepare a detailed marketing strategy, including your target audience, marketing channels, and pricing strategy. Additionally, include a feasibility report, risk assessment, and project timeline. Finally, ensure that the report is clear, concise, and professional-looking.

How to get a population certificate for a PMEGP loan?

To obtain a population certificate for a PMEGP loan, you need to approach the local government authorities, such as the Tehsildar or Revenue Department in your area. You will be required to submit relevant documents, such as proof of identity and residence, along with a request for a population certificate. 

What is the interest rate of a PMEGP loan?

The PMEGP interest rates range from 11% to 12% per annum.

Who is not eligible for a PMEGP loan?

Individuals who have defaulted on any loan or have a bad credit score are not eligible for a PMEGP loan. Also, those already employed in a government job or those who have already received any financial assistance from the government are not eligible for this loan. Additionally, those who have already received assistance under any other government scheme for entrepreneurship development may not be eligible for the PMEGP loan.

What is the first step to applying for PMEGP?

The first step to applying for a PMEGP loan is to visit the official website of the Khadi and Village Industries Commission (KVIC) or the District Industries Centre (DIC) to check for the eligibility criteria and download the application form.

How do I claim margin money in PMEGP?

According to the PMEGP guidelines, beneficiaries can claim the margin money by submitting the required documents and meeting the eligibility criteria. The margin money is refunded after the unit has been operational for a specified period and the loan repayment is in good standing.

How long does it take to approve the PMEGP loan?

The approval process for a PMEGP loan varies based on several factors, including the complexity of the application and the availability of funds. However, on average, the loan takes 30-45 days to be approved.

Which business comes under the PMEGP scheme?

PMEGP scheme offers financial assistance to new and existing micro-enterprises in the manufacturing, service, and agriculture sectors.