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PMEGP Loan

pmegp loan

What is the PMEGP scheme?

The PMEGP full form is nothing but Prime Minister’s Employment Generation Programme (PMEGP) which is a credit-linked subsidy program operated by the Ministry of Medium, Small, and Micro Enterprises, Government of India. KVIC (Khadi & Village Industries Commission) is responsible for the implementation of the PMEGP loan scheme which is the nodal agency at a national level. However, the scheme is implemented at the state level through the District Industries center, KVIB, and KVIC.

PMEGP Loan Details

Below you can see various aspects of the PMEGP scheme of loan right from interest rate and tenure to percentage share of each party in the allotment of funds. 

PMEGP Loan Allotment: Check out the breakup of the money that is mentioned under a PMEGP loan. 

  1. The bank allows 90% of the project cost (for general applicants) and 95% (for weaker sections of society) once the allotment is approved.
  1. From the above-given percentage, 15% to 35% is the subsidy or margin money rendered by the government. The amount of margin money that banks would accept will be proportionate to the actual capital expenditure used by the applicant. The remaining margin money that is proportionate to the amount not used would be given back to the Khadi and Village Industries Commission-KVIC. 
  1. The remaining money (i.e., 90%/95% of money allotted less than 15%-35% subsidy) is offered by the bank as a PMEGP loan or term loan. 

Subsidy/Margin Money: The margin money is placed in a separate savings account connected to the loan account and gets locked for three years, after which it is adjusted with the released or PMEGP loan. 

Rate of Interest: The PMEGP loan’s rate of interest would be at a normal rate as applied to the sector of MSE.

Requirements of Working Capital: The PMEGP loan requires that the working capital expenditure should be equal to the limit of cash credit at least once in the three years after the locking of margin money. In addition, it should not be below 75% utilization of the sanctioned limit. 

PMEGP Loan Tenure: The bank might offer a repayment schedule of three years for the borrowers after an initial moratorium (that normally does not go more than six months) to pay back the PMEGP loan. 

Indicative Sectors for Which Business Loan under the Scheme of PMEGP is Provided: The PMEGP loan is provided for organizations in the below-given sectors:

  • Hand-made Paper and Fibre
  • Agro-based Food Processing
  • Service and Textile 
  • Polymer and Chemical-based Products
  • Forest-based Products
  • Mineral-based Products
  • Rural Engineering and Bio-Tech

Who can apply under the PMEGP scheme – PMEGP Loan Eligibility?

Any person who belongs to SC, ST OBC, general, and minor sections, and people living in border areas and ex-servicemen are eligible under the PMEGP scheme. Let us check the listings of people who are eligible for the PMEGP scheme. 

  • Minimum education qualification should be 8th pass.
  • Self Help Groups
  • Individuals should be at least 18 years old
  • Charitable Trusts
  • Production Co-operative Societies
  • Institutions registered below the Societies Registration Act, 1860.

How to apply for PMEGP online?

Have a look at the steps given below to apply for PMEGP online for an individual:

Step 1: Visit the PMEGP (KVIC website)  for filling the online form. 

Step 2: You have to follow the guidelines for filling the PMEGP application online and enter all the necessary details according to your information.

Step 3: After providing all the essential details, hit on ‘Save Applicant Data’ to save the provided details.

Step 4: You have to upload all the documents for the final application form submission once you have saved your data.

Step 5: Once you complete and submit the application, the ID number and password of the applicant will be sent to his or her registered mobile number. 

FAQs on PMEGP Loan

1. What is the maximum project cost given under PMEGP?

The maximum project cost allowed under PMEGP is Rs. 10 lakhs for Service Unit and Rs. 25 lakhs for Manufacturing Unit.

2. Which business falls under PMEGP?

The business that comes under PMEGP is as follows:

  • Biotechnology
  • Textile products
  • Forest-based products
  • Service
  • Food processing units using agriculture-based products as raw materials
  • Rural engineering
  • Hand-made fibers and paper
  • Mineral, polymers, chemical-based products

3. Which bank is ideal for PMEGP Loan?

There are different Co-operative Banks, Private and Public Sector Banks, Small Finance Banks, Regional Rural Banks, Foreign Banks, Non-banking Financial Companies, and Scheduled Urban banks, etc. that offer PMEGP loan. A few of the leading banks that offer PMEGP loans are Bank of Baroda, Allahabad Bank, SBI, PNB, Axis Banks, etc. 

4. Is PMEGP collateral-free?

As per the RBI guidelines, an organization with a project cost up to Rs. 10 lakhs is collateral-free. Moreover, CGTMSE offers collateral security to projects that range from Rs. 5 lakhs to Rs.25 lakhs. 

5. What is the project report cost of PMEGP?

The project cost is nothing but the break-up of the working capital requirements and the capital expenditure for one cycle. It even comprises the cost of renting or leasing a workshop or any work shed but the sum of such lease or rent is not for above three years. The applicant’s own contribution for the general category falls under 10% of the project cost and the applicant’s own contribution for the special category falls under 5% of the project cost. Remember the land cost cannot be involved in the project cost.

6. Which beneficiaries come under the PMEGP scheme?

The entities given below are the beneficiaries listed under the PMEGP scheme:

  • Production Co-operative Societies
  • Charitable Trusts
  • Self-help Groups (SHGs)
  • Societies registered under Societies Registration Act, 1860
  • Individuals who are above 18 years of age

7. Can an individual staying in an urban area apply for a PMEGP loan?

Yes, of course, the PMEGP loan scheme is accessible to all eligible applicants no matter where they live. However, there are several restrictions on how much subsidy you can receive. For example, the subsidy for the general category is 25% in rural areas and 15% in urban areas. When it comes to weaker sections of society, it is 35% in rural areas and 25% in urban areas. 

8. What is a PMEGP subsidy?

PMEGP subsidy is a credit-linked program offered by the Government of India under which the beneficiary can receive a subsidy of 15% to 35% on the total cost of a project. This subsidy can be mostly availed by MSMEs and individuals all over the country. 

9. Can I receive a PMEGP loan for a fast food restaurant?

Yes, you can get a PMEGP loan scheme to run a fast-food restaurant. If you are eligible, you can also receive a PMEGP subsidy of 90% of the total project cost provided by the Government of India. The PMEGP subsidy can range from 15% to 35% depending upon the loan amount. 

10. Are there any age restrictions for availing a PMEGP loan?

The PMEGP makes the eligibility criteria mandatory that the applicant should be at least 18 years of age. Even though banks might use their own criteria to specify an upper age limit, there are no upper age limits.

11. How long does it take to avail a PMEGP loan?

After the completion of the 16-days training program, the approximate time period to get a PMEGP loan from banks normally need approximately two months in total. 

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