PMEGP Loan: Eligibility, Interest Rates, Documentation & Benefits

The Prime Minister’s Employment Generation Programme (PMEGP) was launched in 2008. It is basically a credit-linked subsidy scheme resulting from the merger of the earlier Rural Employment Generation Programme (REGP) and Prime Minister’s Rojgar Yojana (PMRY). The key objective of PMEGP is to boost employment opportunities in rural and urban regions by establishing micro-enterprises with government subsidy. Here is what else you should know about the PMEGP scheme. 
 

Key Objectives of PMEGP

 
The government of India has launched this scheme with three key objectives, which are as follows:
 

• The government intends to create self-employment opportunities for people living in both urban and rural areas by establishing various micro-enterprises, self-employment projects, and business ventures. 

 

• The programme aims to provide unemployed youth and traditional artisans with sustainable employment near their place of residence. This would help reduce the mass migration of rural youth to urban centres in search of livelihood opportunities.

 

• The government seeks to increase the participation of financial institutions in facilitating credit flow to the economy's micro enterprise sector.

 

Key Features of the PMEGP Scheme

 

• The Khadi and Village Industries Commission (KVIC) is responsible for implementing this scheme at the national level.

 

• The government implements this scheme at the state level through District Industries Centres (DICs), banks, State Khadi and Village Industries Boards (KVIBs) and State KVIC Directorates. 

 

• This scheme provides financial and other assistance to business units that are yet to be established.

 

• The scheme does not specify a minimum or maximum income requirement for an enterprise.

 

• PMEGP benefits will not be available to units that are already receiving subsidies from the central or state governments.
   

• The scheme's benefits are available to coir-based projects and any other industries that do not fall under the scheme's negative list.

 

• The scheme's per capita investment should not be more than Rs 1.5 lakh in hilly regions and Rs 1 lakhs in plain areas. 

 

• The upper limit for project costs in the service and manufacturing industries is fixed at Rs 10 lakh and Rs 25 lakh, respectively.

 

PMEGP Loan Details

 

• Financial institutions will offer credit finance to cover capital expenditure via working capital loan or term loan.

 

• Under this scheme, the financial institution may also disburse  the amount in the form of a composite loan, which includes both working capital and capital expenditure.

 

• The credit value under this scheme ranges from 60 to 75% of the project cost after deducting the owner’s contribution and subsidy. 

 

• Margin money is available under this scheme based on actual capital expenditure, and any excess is to be refunded to KVIC.

 

• Working capital should be used in a way that it reaches 100% of the cash credit limit within three years of the margin money's lock-in period and not less than 75% of the sanctioned limit.

 

• The repayment tenure of a PMEGP loan ranges from three to seven years. 

 

• The scheme does not require the beneficiary to put up any collateral or provide a third-party guarantee. However, if the project costs is more than Rs 10 lakh, the beneficiary may be required to put up collateral in accordance with the lender's requirements.

 
Also Read: Top Government Business Loan Schemes in India
 

List of Projects Covered Under this Scheme

 

Forest Industry	Horticulture-Organic Farming	Cold Chain Solution	Electrical Equipment
Textile & Apparel	Service Sector Industry	Cold Storage	Small Business Models
Dairy & Milk Products	Waste Management	Cement & Allied Products	Chemical/Polymers
Paper & Allied Products	Food Processing Industry	Plastic and Allied Services	Minerals

 

List of Projects Not Covered Under the PMEGP Scheme

 

Sericulture	Rural Transport	Businesses linked with intoxicant products
Cultivation	Container Manufacturing (using recycled plastic)	Pashmina Wool Processing
Horticulture	Polythene Bag Manufacturing (less than 20 microns)	Hand Weaving & Spinning Products (listed under the Khadi Certification Rule)
Floriculture	Businesses linked with meat	CNG Auto Rickshaw

 

Percentage of Margin Money Subsidy Under PMEGP Scheme

 

Beneficiary Category	Beneficiary's Share in the Total Project Cost	Subsidy Rate for Rural Areas	Subsidy Rate for Urban Areas
General	10%	25%	15%
Special	5%	35%	25%

 

What is the interest rate of a PMEGP loan?

 
The PMEGP interest rate applicable to enterprises is nominal and can range between 11-12%. The interest rate may change from time to time.
 

Who is eligible for a PMEGP loan?

The PMEGP loan eligibility requirements are not very strict. Here are the specifics:
 

• Any individual over the age of 18 years can apply to this scheme.

 

• The educational requirements are determined by the value of the project and the industry. Individuals in the service sector with a project value exceeding Rs 5 lakhs and individuals in the manufacturing sector with a project value over Rs 10 lakhs must have a minimum educational qualification of passing 8th standard.

 

• Any institutions that are registered under the Societies Registration Act of 1860.

 

• Any co-operative society that operates in a production-based industry.

 

• Self-help groups (including below poverty line) are eligible if they have not benefited from any other government-sponsored programmes.

 

• Charitable trusts

 

What are the documents required for a PMEGP loan?

 
Following are the key PMEGP loan documents you will require to receive the scheme benefits:
 

• PAN card
• Aadhar card
• Rural area certificate
• Project report
• Special category certificate (if applicable)
• Educational, EDP, or skill development training certificate
• Authorisation letter

 

How to apply for a PMEGP loan?

 

• Visit any of the following websites: kviconline.gov.in or my.msme.gov.in

 

• Go to the “Prime Minister Employment Generation Programme” section

 

• Navigate to the “Online Application Form For Individual" and fill out essential details such as personal details, sponsoring office, type of activity, and a few more. 

 

• Click on the "Submit" button to finish the registration process.

 

• The ID number and password of the applicant is then sent to their registered mobile number as proof of successful enrolment.

 

• Registered candidates are then required to fill in the remaining details by visiting the PMEGP portal.

 
Also Read: Funding Options for Small Businesses and Start Ups
 

To conclude

 
The PMEGP scheme focuses on providing opportunities for self-employment through subsidies for micro enterprise units.