A Guide to Understand the PMEGP Loan Scheme

Understand the PMEGP Loan Scheme: Benefits, Eligibility, & How to Apply 

The Prime Minister’s Employment Generation Programme is a credit-linked funding scheme formed due to the merging of two government schemes: The Prime Minister’s Rozgar Yojana and Rural Employment Generation Programme. The main reason behind launching this scheme was to offer entrepreneurs financial support in setting up their new businesses. 

As per this scheme, the government will provide 15% to 35% of the project cost to the beneficiaries. Any beneficiary above 18 years of age can opt for a PMEGP loan. To learn more about this scheme, keep reading.

Features and Benefits of PMEGP Scheme 

Following are the advantages and features of a PMEGP Loan:

  • The Khadi and Village Industries Commission (KVIC) has executed this scheme nationally.
  • Under this scheme, there is no particular income requirement for an organisation 
  • Those parties who are already getting adequate funding from the state or central government cannot opt for this scheme. 
  • The government has brought in this scheme to the state level via financial institutions, State KVIC Directorates, District Industries Centres (DICs), and State Khadi and Village Industries Boards (KVIBs). 
  • This scheme offers small business loan and other financial support to MSMEs, which are either newly established or on the verge of establishment.
  • The scheme’s per capita investment must not exceed Rs. 1.5 Lakhs and Rs. 1 Lakh in hilly areas and plain regions, respectively. 
  • As per this scheme, financial institutions can also provide funding with a composite loan comprising both working capital and capital expense.
  • The maximum limit for project costs in the service industries is set at Rs. 10 Lakhs, while it is set at Rs. 25 Lakhs in manufacturing industries.
  • Under this scheme, financial institutions provide credit facilities for capital expenditure coverage through term loans or working capital loans.
  • According to the PMEGP scheme, credit value ranges between 60% and 75% of the total project cost after subtracting the subsidy and owner’s contribution.  
  • The tenure of PMEGP loan repayment ranges between 3 years and 7 years. 
  • Working capital must be used in such a way that it can reach 100% of cash credit limit and not subside lower than 75% of the sanctioned amount before 3 years of the lock-in period. 
  • In this scheme, a beneficiary does not need to offer any collateral. However, when the project charges exceed Rs. 10 Lakhs, the beneficiary may have to offer their property as collateral as per the lender’s need. 

Now after knowing the features and benefits of the PMEGP Scheme, take a look at the eligibility criteria to apply for a PMEGP loan. 

PMEGP Loan Eligibility Criteria

Following are the eligibility criteria one should meet while opting for a PMEGP loan:

  • Applicants should be above 18 years of age 
  • A beneficiary should pass class 8 if they want to avail the PMEGP loan in order to construct a service unit that costs more than Rs. 5 Lakhs and a manufacturing unit that costs above Rs. 10 Lakhs
  • Co-operative societies taking part in the production of business
  • Self-help groups can also opt for PMEGP loans. However, first, the group has to ensure they are not getting any benefit from any other scheme.
  • Societies having a registration with Societies Registration Act, 1860 can avail a PMEGP loan.

After considering the eligibility criteria, you need to know about the documents required to apply for this loan.

Documents Required to Apply for a PMEGP Loan

Following is the list of the documents required to avail a PMEGP loan:

  • Application form with an attached passport-size photo 
  • Identity Proof (includes PAN card, Aadhaar card, passport)
  • Address Proof (includes utilities bill, Aadhaar card)
  • Class VIII Pass certificate
  • Project Report
  • Caste Certificate for SC, ST, PHC, OBC, Minorities, Ex-Servicemen 
  • Certificate of technical and academic courses, if available 
  • Certificate of Entrepreneur Development Programme (EDP)
  • Other documents 

Now after having an idea about the features, eligibility criteria, and documents required to apply for a PMEGP loan, have a look at the simple steps to apply for this loan.

How to Apply for a PMEGP Loan?

The ways to apply for a PMEGP loan are discussed below in the following steps:

Step 1: Navigate to the official webpage of PMEGP Scheme available on KVIC website

Step 2: Enter your credentials for login 

Step 3: Select the applicable option on the page – individual or non-individual

Step 4: After this, you will come across an online application form

Step 5: Fill out the application form with appropriate details

Step 6: After completion, select the ‘Save Applicant Data’ option below the page

Step 7: Lastly, you have to upload the essential documents and click on ‘Submit’.

Upon completing all these steps successfully, you will get every detail regarding the application on your registered mobile number and email ID. Subsequently, an application for a PMEGP loan will be processed. 

Now you have a clear idea about a PMEGP loan, its features and benefits, as well as how to apply for it. However, before availing this credit facility, make sure you go through its eligibility criteria thoroughly and gather the necessary documents to experience a smooth application process.

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