PMEGP Loan: The Prime Minister’s Employment Generation Programme (PMEGP) is a central sector scheme implemented by the Ministry of Micro, Small and Medium Enterprises (MSME). It aims to generate employment opportunities in rural and urban areas of the country through setting up of new self-employment ventures and micro-enterprises.
The scheme provides financial assistance in the form of subsidized loans for viable self-employment ventures to educated unemployed youth and traditional artisans.
What is PMEGP Loan
The PMEGP loan is the financial assistance provided under the PMEGP scheme. It offers loans at a subsidized rate of interest to individuals looking to set up micro-enterprises in manufacturing, services or the agro-industry sector in rural or urban areas.
The maximum loan amount provided is up to 25 lakhs with applicable subsidies. The extent of subsidy provided depends on the category of beneficiary.
Key Details About PMEGP Loan
Here are some important details about the PMEGP loan that borrowers should know:
To be eligible for a PMEGP loan, applicants must meet certain criteria:
- Indian citizen above 18 years age
- Minimum VIII standard pass for projects above Rs.10 lakh
- Training required for project cost above Rs.5 lakh
- Income should not exceed Rs 1 lakh per annum in rural areas and Rs 2 lakh per annum in urban areas
Loan Amount and Subsidies
- Maximum loan amount up to 25 lakhs
- Subsidy rate 15% to 35% based on category
- Urban women – 35% subsidy
- SC/ST/OBC/Minorities – 25% subsidy
- General category – 15% subsidy
The repayment period for PMEGP loans is 5 to 7 years after an initial moratorium period of 6-18 months from the date of disbursement. This provides time to establish the business before beginning repayment.
Rate of Interest
The annual rate of Interest charged is between 4% to 6.5% based on category and lending agency. This is significantly lower than market interest rates.
No collateral or margin money is required for projects upto Rs 10 lakh. For higher loan amounts, the lending agencies may request security in the form of assets.
How to Apply for PMEGP Loan
The process of applying for the PMEGP loan may seem complicated, but can be broken down into simple, easy-to-understand steps. By clearly understanding what is required at each stage, you can prepare in advance and submit your application smoothly. Below are the key steps explained in detail:
Step 1: Online Registration
The first step is registering yourself on the official PMEGP portal (www.kviconline.gov.in). Visit the portal and click on “New Registration”. You will need to fill in personal details like name, date of birth, contact information, qualification, social category etc. An application ID and password is generated which must be saved for future reference.
This registration is mandatory for loan application under PMEGP. All applicants need to complete this online process and obtain the application ID before proceeding further.
Step 2: Submission of Application
Once registered, the next step is applying for the loan. First, you need to prepare a comprehensive project report including technical details, costs involved, and pricing of products/services. This gives an overview of your proposed micro-enterprise.
Next, collate all necessary documents like residence proof, qualification certificates, cast certificate if applying under reserved category etc. Refer to the documents required section for complete list.
Submit the project report, application form and documents at the closest KVIC/KVIB office based on your location. You can search for contact details on the portal. An acknowledgement receipt is provided.
Step 3: Appraisal and Sanction
The KVIC/KVIB office scrutinizes and processes your application. It undergoes a detailed appraisal where factors like feasibility, sustainability, profitability etc. are evaluated.
If approved, you will receive an in-principle sanction letter stating the loan amount, rate of interest, subsidies applicable, repayment period, moratorium period etc. The terms and conditions for availing loan are disclosed.
You will need to provide your acceptance of these terms and submit any other documents sought within stipulated time for disbursement. Else, the sanction may be treated as cancelled.
Step 4: Disbursement
Once sanctioned, the loan is disbursed to your account via electronic transfer by the lending agency associated i.e. nationalized bank. This completes the application process.
However, certain banks may require you to furnish additional documents or execute loan related documents as per regulatory guidelines before crediting loan amount. Hence, you should be prepared to share/submit any sought financial statements, KYC, or other documents to avoid delays in disbursement.
Thus, by following these key steps – online registration, application submission, appraisal, and finally disbursement, you can apply for and obtain financing under PMEGP Scheme. Maintaining preparedness at each stage helps expedite the entire process.
Here are some key documents required for the application:
- PMEGP Application Form
- Copy of qualification certificates
- Residence proof
- Caste certificate for reserved categories
- Project report with technical details and costs involved
- Quotations from suppliers etc
Additionally, lending agencies may request certain other documents once the application is approved.
Key Benefits of PMEGP Loan
Some major benefits of the PMEGP loan are:
Low Rate of Interest
The interest rate charged is considerably lower compared to loans from banks and other sources which reduces the overall project cost.
Collateral Free Loans
No security or margin money required for loans upto 10 lakhs making financing accessible and hassle free. This helps weaker sections.
Long Repayment Tenure
The long repayment period of 5-7 years provides flexibility along with moratorium period before beginning repayment.
Subsidies up to 25-35% make projects financially viable. This supports entrepreneurs.
Thus, PMEGP loans offer affordable financing and key benefits for micro-enterprises helping to generate employment across rural and urban areas.
The PMEGP Loan offers financial assistance for unemployed individuals to set up micro-enterprises across manufacturing, services and the agro-industry sectors. It provides subsidized loans upto Rs 25 lakhs with attractive repayment terms, moratorium period and applicable subsidies. By meeting the eligibility criteria, target groups can avail of this loan by submitting project reports online. With information shared above, you can now easily apply for the PMEGP loan.