PMEGP Loan: Get a Loan with up to 35% Subsidy; Apply Online!

The Prime Minister Employment Generation Programme (PMEGP), is a scheme offered by the government of India to provide financial assistance to those who wish to set up new enterprises and existing beneficiaries under the PMEGP programme. The nodal agency responsible for implementing the scheme at the national level is the Khadi and Village Industries Commission (KVIC). The PMEGP scheme is implemented via State Khadi and Village Industries Commission Directorates (KVIC), District Industries Centres (DIC), State Khadi and Village Industries Board (KVIB), and banks at the state level.

Objectives of PMEGP Loan

• To create job opportunities in urban areas and rural regions of India by establishing new self-employment ventures, micro-enterprises, and projects.
• To offer sustainable and continuous employment to a relatively large segment of prospective as well as traditional artisans and unemployed youth from both urban as well as rural areas of India.
• To unite widely dispersed urban and rural unemployed youth as well as traditional artisans and provide them with self-employment opportunities
• To raise artisans’ wage-earning capacity while contributing to the rise in the growth rate of both urban as well as rural employment.

Benefits of the PMEGP Scheme

Under the PMEGP Scheme, funds are allocated under two major heads:

1) Margin Money Subsidy

• Funds are allocated in the annual Budget Estimates for the disbursement of Margin Money subsidies for setting up new micro-enterprises.
• A portion of the funds allocated under Budget Estimates for Margin Money subsidy (Rs. 100 Crore or as approved by the competent authority) will be earmarked for each financial year toward the degradation of existing PMEGP/REGP/MUDRA units.

2) Backward and Forward Linkage

• 5% of the total allocation under Budget Estimates for a Financial Year against PMEGP will be earmarked for funds under Backward and Forward Linkages.
• These funds will be utilized for various activities such as awareness camps, monitoring meetings, workshops, exhibitions, bank meetings, publicity, entrepreneurship development programs (EDP) training, etc.

Levels of Support under PMEGP

1) For Setting up New Micro-Enterprises

General Category Beneficiaries:

• Beneficiary’s Contribution: 10% of project cost.
• Subsidy Rate: 15% for Urban Areas, 25% for Rural Areas.

Special Category Beneficiaries:

(Including SC, ST, OBC, Minorities, Women, Ex-Servicemen, Trasgenders, Differently abled, etc.)

• Beneficiary’s contribution: 5% of project cost.
• Subsidy rate: 25% for urban Areas, 35% for Rural Areas.

2) Second Loan for Upgradation of Existing Units.

(PMEGP/REGP/MUDRA)

• Beneficiary’s contribution: 10% of the project cost.
• Subsidy rate: 15% (20% in NER and Hill States)

Notes:

The maximum project/unit cost admissible for Margin Money subsidy:

• Manufacturing sector: Rs.50 lakh
• Business/Service sector: Rs.20 lakh

Banks will provide the balance amount of the total project cost excluding the beneficiary’s contribution.

For projects exceeding the maximum admissible cost, banks may provide the balance amount without any Government subsidy.

Implementing Agencies

At the national level, the Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME, serves as the single nodal agency for the scheme.

At the state level, the scheme is implemented through various entities including the state offices of KVIC, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), the Coir Board (for coir-related activities), and banks. Additionally, the government may engage other suitable agencies for the implementation of the scheme.

Nature of Assistance

Nature of assistance offered by Prime Minister’s Employment Generation Programme (PMEGP).

The maximum amount of the unit project that is permitted in the manufacturing sector is limited to Rs. 25 lakh, while the limit for the services/business sector is set at Rs.10 lakh. Here are the beneficiary’s subsidy rate categories under the programme.

Beneficiary Categories	Beneficiary’s share of the total project	Subsidy rate (From Govt.)- Urban	Subsidy rate (From Govt.)- Rural
General	10%	15%	25%
Special*	5%	25%	35%

 

The remaining amount of the overall project cost will be offered by banks as working capital and term loans.

PMEGP Loan Eligibility Criteria

Here are the eligibility criteria for new enterprises (units) that wish to avail of the Prime Minister’s Employment Generation Programme:

• Must be at least 18 years of age.
• Must have completed at least VII standards (for those seeking funding over Rs.5 lakh in the service/business sector and more than Rs.10 lakh in the manufacturing sector).
• Self Help Groups (SHG inclusive of those that fall Below the Poverty Line provided they have not received any benefits from any other scheme).
• Institution registered under Societies Registration Act, 1860.
• Charitable Trusts.
• Production Co-operative Societies.
• Existing units (under REGP, PMRY or any other state or central Government scheme) and units that have availed subsidies under any other State or Central Government Scheme do not qualify for this.

Exclusion for PMEGP Criteria

For PMEGP new enterprises:

Ineligible Units: Existing units under PMRY, REGP, or any other scheme of the Government of India or State Government, as well as units that have already received a government subsidy under any other scheme of the Government of India or State Government, are not eligible.

Family Limit: Only one person per family is eligible for financial assistance to set up projects under PMEGP. For this purpose, ‘Family’ includes the applicant and their spouse.

Negative List of Activities: The following activities are not permitted under PMEGP for setting up micro-enterprises, projects or units.

Meat-Related Industries: Any industry or business connected with meat (slaughtered), including processing, canning, and/or serving items made from meat as food.

Intoxicant Production: Production, manufacturing, or sale of intoxicant items such as beedi, pan, cigars, cigarettes, etc.

Liquor Services: Hotels, dhabas, or sales outlets serving liquor.

Agricultural Activities: Industries or businesses connected with the cultivation of crops or plantations such as tea, coffee, rubber, sericulture (cocoon rearing), horticulture, floriculture, and animal husbandry are not allowed. Odd-farm or farm-linked activities related to sericulture, horticulture, and floriculture are also allowed.

Local Prohibitions: Activities prohibited by local government or authorities due to environmental or socio-economic factors are not permitted.

PMEGP Loan Interest Rate:

The interest rate applicable to PMEGP shall be the normal interest rate ranging between 11% to 12% and the repayment tenure can range from three years to seven years following an initial moratorium.

PMEGP Loan Application Process

The division/state directors of Khadi and Village Industries of respective states and the Khadi and Village Industries Board will release local advertisements via electronic and print media wherein applications will be invited together with project proposals from potential beneficiaries who wish to start a service unit or establish an enterprise under the programme.

Online Application

The procedure to apply for a PMEGP loan on the portals is given as follows-

1) For New Unit:

1. Visit the official website by clicking on the link: Official website.
2. Click on the Apply button under the ‘Application for Existing Units’ tab.
3. Go to the online Application tab and fill out the complete form.
4. Complete the form and click on the next page to upload the required documents. Proceed for final submission.

2) For Registered Applicant:

Login form for Registered Applicants of Second Loan Subsidy for Upgrading of Existing Unit:

1. Visit the Official website of the PMEGP portal: Official Website.
2. Enter your User ID and Password, then click on ‘Log in’.

Offline Application

• Fill out the complete form available by clicking on the link: Offline Form.
• The filled original form must be submitted to the respective KVIC/KVIB/DIC/Coir Board Officers of the State.
• Upon submission, the applicant will receive an acknowledgement slip from the department of the concerned KVIC/KVIB/DIC/Coir Board Office.

Required Documents for PMEGP Loan

You have to submit the following documents for the PMEGP loan-

1. Caste Certificate.
2. Aadhar Card.
3. PAN card.
4. Bank account details.
5. Project Report.
6. Special Category Certificate (If Required).
7. Education certificate.
8. Entrepreneurship Development Programme (EDP) certificate.
9. Rural area certificate.
10. Registration certificate.

Nodal Agencies in PMEGP Implementation

The following are the other agencies associated with nodal agencies in PMEGP implementation-

• Field offices of Khadi and Village Industries Commission along with its state offices.
• District Industries Centre of every Union Territory Administration and State Government that report to their Secretaries or Commissioners.
• State Khadi and Village Industries Boards (KVIBs)
• Coir Board.
• Khadi and Village Industries Federation.
• Banks and Financial Institutions.
• Offices of the National Small Industries Corporation, training centres, technical centres, incubators as well as Training cum Incubation Centres established in PPP Mode.

Budget and Targets under PMEGP Loan

Since its inception in 2008 until 13 March 2023, over 8.58 lakh enterprises have received assistance, generating an estimated assistance, generating as estimated total employment of around 70 lakh. Margin Money subsidy disbursed under PMEGP has amounted to approximately Rs. 21509 crore,

For the fiscal year 2022-23, the Budget Estimate allocation is Rs.500 crore, while for 2023-24, the proposed Budget Estimate allocation is Rs.2700 crore.

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