The Prime Minister Employment Generation Programme (PMEGP Scheme) is a credit-linked incentive scheme backed by the Indian government. Under this scheme, recipients may get a state subsidy ranging from 15 to 35 percent of the project cost.

The purpose of the initiative is to expand employment opportunities in rural and urban regions by establishing microbusinesses.

Let’s find out more about this Stand-Up India scheme and how you can apply for it.

How does PMEGP work?

Prime Minister Rojgar Yojana (PMRY scheme) and the Rural Employment Generation Programme (REGP) were two former initiatives that worked similarly to generate employment among the youth. 

The beneficiary must only contribute 5-10% of the contract sum, while the government subsidises 15-35 percent of the project cost based on several conditions. 

The remaining monies get provided to the entrepreneur as term loans by the collaborating banks.

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Interest rate

The interest rate and subsidy granted by various financial institutions under the PMEGP scheme will vary from bank to bank. They will determine it by the individual’s profile, security standard, and cost estimation.

Loan tenure

PMEGP loans are available for three to seven years. PMEGP loan lenders have offered a 6-month freeze on all loans accepted under the PMEGP scheme because of the present pandemic crisis.

After an initial moratorium, the bank may provide borrowers with a three-year repayment plan to pay back the loan.

Subsidy and working capital

The subsidy holds for three years in different savings accounts associated with the loan facility before being amended or disbursed with the PMEGP loan and PMRY scheme.

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Working capital spending for the PMEGP loan must match the cash credit ceiling at least once during the three years following the subsidy lock-in. In addition, you should use the sanctioned limit at least 75% of the time.

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Sectors where the loan gets offered

The PMEGP plan offers loans to organizations in the following sectors:

  • Agriculture-based food processing
  • Forest-derived products
  • Handmade paper and fiber
  • Mineral-based products
  • Chemical and polymer-based products
  • Biotech and rural engineering
  • Textile

Goals of PMEGP 

  • Possibilities for long-term self-employment in the country’s urban
  • Through the establishment of micro-enterprises, many jobless rural and urban youth, traditional and future artisans, will find long-term and stable employment.
  • Increasing credit institutions’ involvement in improving access to credit for the micro sector

What are the eligibility criteria?

Individuals and other entities that match the required conditions for a term loan are eligible for a PMEGP loan. The following is a list of eligible entities that can request loans under the PMEGP:

  • Individuals who want to start a manufacturing or service business that costs more than Rs. 10 lakh or Rs. 5 lakh must have completed at least Class VIII of schooling.
  • Self-help groups (SHGs) and charitable trusts are examples of qualified entities for the PMEGP scheme.
  • Societies registered under the Societies Registration Act, which got passed in 1860
  • Cooperative Production Societies

The PMEGP scheme has no income limits for obtaining loans. Loans are only accessible to new units, not existing properties established through PMRY, REGP, or any other government program.

Furthermore, any team that has received a subsidy under another program is ineligible for a PMEGP loan.

What are the documents required?

Applicants would have to submit the following documents when applying for a PMEGP loan:

  • Submit a filled-out application form as well as passport-size photographs.
  • Report on the project.
  • Proofs of the applicant’s identity and address
  • PAN card, Aadhaar card, and VIII Pass certificate of the applicant.
  • If necessary, a certificate for a particular category.
  • Entrepreneur Development Programme (EDP) training certificate
  • SC/ST/OBC/Minority/Ex-Servicemen/PHC
  • If applicable, a certificate of completion of academic and technical courses.
  • Any other documents that the bank or NBFC requires.
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The PMEGP e-portal allows MSME registration applicants to apply for PMEGP registration online by filling out and submitting an application form at https://www.kviconline.gov.in/pmegp.jsp. 

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How to apply for a loan?

Individual and non-individual candidates can apply for the PMEGP through the official web portal of the Prime Minister Employment Generation Programme. To apply for credit, follow the instructions outlined below:

  • Visit the PMEGP website and fill out the form online as asked.
  • Choose either the ‘Online Application form for Individuals’ or the ‘Online Application form for Non-individuals’ option once you’ve arrived at the home page.
  • Fill in all the required information correctly.
  • Click the ‘Save Applicant Data’ option after you’ve completed all of the needed fields.
  • After you’ve uploaded all of the required papers, submit the form.
  • After successful submission, an acceptance ID and password will get emailed to the applicant’s registered cellphone number.

For non-individuals:

The candidate must pick a type from ‘Self-help Groups,’ ‘Trusts,’ ‘Regd. Institutions,’ and ‘Cooperative Societies’ on the official site and choose the ‘Online Application form for Non-individuals’ option. The elements of the conditions of the groups mentioned above will vary.

Financial assistance offered by the Stand Up India scheme

The program provides financial support to people based on a variety of factors. However, because the program is for micro, small, and medium-sized businesses (MSMEs), there are some restrictions on the number of projects that qualify and the amount of money borrowed.

The borrower must contribute 10% in the General category, and 5% in the Special category, including SC/ST/OBC, minorities, women, ex-defense employees, physically challenged people, North East region hills, and border districts.

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In metropolitan centres, the subsidy rate for the General category will be 15%, while in rural areas, it will be 25%. The government would provide a 25% subsidy for special persons in urban regions and a 35% subsidy in rural areas.

For a manufacturer, the loan amount ceiling is Rs. 25 lakh, and for a service unit, it is Rs. 10 lakh. Under the PMEGP scheme, you don’t have to provide security for projects costing up to Rs. 10 lakh.

Under the PMEGP scheme, the CGTMSE provides a collateral guarantee for projects worth more than Rs. 5 lakh but less than Rs. 25 lakh.

Bottom line

With this scheme, the government hopes to support MSMEs and flourish their business ideas. Ziploan has similar ideas and thus provides easy business loans up to Rs. 7.5 Lakh for MSME registration companies.

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Frequently Asked Questions

What is PMEGP loan scheme?

The Prime Minister Employment Generation Programme (which is the PMEGP full form) is a Government of India-backed credit linked subsidy scheme. Under this scheme, beneficiaries can get a subsidy amounting to 15-35% of the project cost from the government.

What is the full form of PMEGP?

PMEGP stands for Prime Minister Employment Generation Programme.

Who is eligible for PMEGP?

Any adult beneficiary above 18 years is eligible for financing under PMEGP.

What is DIC in PMEGP?

It is implemented jointly by the DIC (District Industries Centre), KVIC (Khadi and Village Industries Commission), and KVIB (Khadi and Village Industries Board).

Is PMEGP and Mudra loan same?

Since, PMEGP Was for Manufacturing units and service units in business or service sectors, while Mudra Bank is only focused on Micro Units Development (for which Up to Rs. 10 lac of loan is given).

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