PMEGP Scheme – PMEGP is the acronym for Prime Minister’s Employment Generation Program is a Government of India-backed credit-linked subsidy scheme Under this scheme, applicants will obtain a grant of 15-35% of the expense of the project from the government. PMEGP is a strategy for the Ministry of Micro, Small, and Medium Enterprises and is integrated at the national level by the Khadi and Village Industries Commission (KVIC). As a businessman, it will provide you with the financial assistance you need to start up a new project. Continue reading to learn much more about the PMEGP scheme.

Objectives of the PMEGP scheme

PMEGP Scheme
  • Producing job opportunities for both urban and rural areas of India through the growth of new self-employed projects, micro-enterprises, and projects.
  • Promote self-employed prospects for widely scattered traditional craftsmen/unemployed rural and urban youth to the maximum practicable at their place.
  • To establish permanent and consistent jobs for rural and unemployed youth and also aspiring and conventional craftsmen, thus preventing rural youth from commuting to urban areas.
  • Increase the income-earning ability of craftsmen and stimulate the growth rate of both rural and urban employment.
Beneficiary CategoriesBeneficiary’s Share (of Total Project)Subsidy Rate (From Govt.) – UrbanSubsidy Rate (From Govt.) – Rural
General10%15%25%
Special5%25%35%

PMEGP loan limit

The PMEGP loan cap is from Rs. 9.5 to Rs. 23.75 lakh. The overall project cost for both the manufacturing sector shall be capped at ₹25 lakh and capped at ₹10 lakh for the business or service sector. The beneficiary is required to make a contribution of 5 to 10% and the bank pays the balance 90 to 95%.

That means the bank credit would contribute to 60-75% of the cost of the project, provided that the remainder 15-35% is earned as margin money via the PMEGP Scheme. Banks shall include the bulk of the cost of the project as a term loan.

Will the PMEGP loan require collateral?

Projects up to Rs.10 lakh don’t really require collateral as per RBI guidelines. CGTSME issues credit insurance for projects with costs ranging from Rs.5 lakh to 25 lakh. The PMEGP loan procedure is different for projects costing more than Rs.10 lakh since you will need to have protection under the terms of your lender.

Loans under the PMEGP Scheme have a daily interest rate of between 11 and 12%.

Who can apply for a PMEGP loan?

Any individuals should meet the following criteria.

  • Any individual whose age is above 18 years.
  • The individual should have completed at least the 8th level for a manufacturing sector project costing more than Rs.10 lakh and a business/service sector costing more than Rs.5 lakh
  • Self-help groups, including those falling within the scope of the BPL, given that the SHG hasn’t really benefited from some other scheme)
  • Institutions authorized under the Societies Registration Act,1860.
  • Production cooperative Societies.
  • Charitable Trusts.

That being said, existing units including those under PMRY, REGP, or other state or central government schemes and units benefited from a state or central government scheme cannot benefit from a PMEGP loan.