PMEGP Loan: Eligibility, Interest Rates, Documentation & Benefits
The Prime Minister’s Employment Generation Programme (PMEGP) was launched in 2008. The key objective of PMEGP is to boost employment opportunities in rural and urban regions by establishing micro-enterprises with government subsidies.
What is the PMEGP Loan Scheme?
The PMEGP is a flagship credit-linked subsidy scheme introduced by the Ministry of MSME to promote self-employment through the setup of new micro-enterprises. It was formed by merging the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP).
Under the latest guidelines, the scheme has been extended with an outlay of ₹13,554.42 Crore, specifically focusing on traditional artisans and unemployed youth in both urban and rural India.
Key Features of PMEGP Loan Scheme
- Massive Subsidy: Depending on your category and location, you can receive a subsidy (Margin Money) ranging from 15% to 35% of the project cost.
- High Project Limits: The maximum project cost for the manufacturing sector is ₹50 Lakh, and for the service/business sector, it is ₹20 Lakh.
- Low Own Contribution: Entrepreneurs only need to invest 5% to 10% of the project cost from their own pocket.
- No Collateral for Small Projects: As Per the latest RBI updates, projects up to ₹20 Lakh do not require collateral security.
- Digital Transparency: Every unit undergoes 100% physical verification through the KVIC-GIS Ticketing System and geo-tagging to ensure genuine business establishment.
What are the Objectives of the PMEGP Loan Yojana?
The Government of India has outlined three core missions for this scheme:
- Job Creation: To generate continuous and sustainable employment opportunities in every corner of the country.
- Prevent Migration: By helping rural youth start businesses near their homes, the scheme aims to reduce the forced migration to urban cities.
- Artisan Support: To bring traditional artisans back into the mainstream economy by providing modern credit facilities.
The Prime Minister’s Employment Generation Programme (PMEGP) is a flagship credit-linked subsidy scheme monitored by the Ministry of MSME. It has been approved for continuation through the 15th Finance Commission cycle with an outlay of ₹13,554.42 Crore. Resulting from the merger of the Rural Employment Generation Programme (REGP) and Prime Minister’s Rojgar Yojana (PMRY), the PMEGP loan scheme aims to boost employment in rural and urban regions by establishing micro-enterprises.
Also Read: What is an MSME Loan? Meaning, Schemes and Collateral-Free Financing Explained
PMEGP Loan Details & Project Cost Limits
Under the latest guidelines, the maximum project cost limits have been significantly enhanced:
- Manufacturing Sector: Up to ₹50 Lakh.
- Service/Business Sector: Up to ₹20 Lakh.
Percentage of Margin Money Subsidy Under PMEGP Scheme
| Beneficiary Category | Beneficiary Contribution | Subsidy (Urban) | Subsidy (Rural) |
|---|---|---|---|
| General Category | 10% | 15% | 25% |
| Special Category* | 5% | 25% | 35% |
*Includes SC, ST, OBC, Minorities, Women, Ex-Servicemen, Transgenders, Differently-abled, and residents of NER/Hill areas.
Documents Required for PMEGP Loan
To ensure a smooth application process at Hero FinCorp or any partner bank, keep these documents ready:
- Identity & Address Proof: Aadhaar Card and PAN Card (Mandatory).
- Project Profile: A Detailed Project Report (DPR) outlining costs and revenue.
- Education Proof: 8th Standard pass certificate (mandatory for projects above ₹5 Lakh in services or ₹10 Lakh in manufacturing).
- Special Category Certificate: Caste certificate or relevant proof for SC/ST/OBC/Minorities/Ex-servicemen.
- Rural Area Proof: A certificate from the local Sarpanch or Revenue Authority if the unit is in a rural zone.
Who is Eligible for the PMEGP Loan Scheme?
- Age: Any individual over 18 years of age.
- Education: Minimum 8th-grade pass for high-value projects (above ₹5L/₹10L).
- Existing Units: This scheme is strictly for new units only. If you have already received a subsidy from another government scheme, you are not eligible for the first cycle.
- Institutional Entities: Self-Help Groups (SHGs), Charitable Trusts, and Registered Co-operative Societies are also eligible.
- Creditworthiness: While there is no strict income ceiling, Hero FinCorp prefers a CIBIL score of 685 or above to ensure seamless loan processing.
What is the PMEGP Loan Interest Rate?
- Standard MSME Rates: Interest is charged at normal market rates applicable to micro-enterprises, as the government subsidy specifically covers the project cost (Margin Money), not the interest.
- Current Range: Following recent RBI adjustments, rates typically range between 9.5% and 12% per annum.
- Lender Discretion: The exact rate is determined by the bank or NBFC (like Hero FinCorp) based on your credit score and project risk.
- EMI Estimation: Borrowers are encouraged to use a digital EMI calculator to plan monthly outflows according to the 3 to 7-year repayment tenure.
How to Apply for a PMEGP Scheme Loan?
The application process is entirely digitized through the KVIC portal:
- Portal Visit: Go to kviconline.gov.in or the Jan Samarth portal.
- Fill Form: Choose the "Online Application Form For Individual" and enter your details.
- Upload & Save: Upload the required documents (DPR, Aadhaar, etc.) and save the data.
- Training: Once your application is provisionally cleared, you must complete the Entrepreneurship Development Programme (EDP) training (usually 10 days offline or 60 hours online).
How to Check PMEGP Loan Application Status?
Tracking your application is simple and can be done in real-time:
- Visit the PMEGP e-Portal.
- Click on the "Registered Applicant Login" button.
- Enter your User ID and Password (received during registration).
- Click on "View Status" to see if your application is with the Nodal Agency, the Bank, or if the subsidy has been released.
Conclusion
The PMEGP loan scheme is a golden opportunity for India's workforce to transition from job seekers to job creators. With a reduced RBI repo rate (currently 5.25%) and enhanced project limits, the financial environment is riper than ever for new ventures. At Hero FinCorp, we encourage you to use this guide as a roadmap to secure your funding and build a legacy of economic self-reliance.
FAQs About PMEGP Loan
What Is The Minimum Cibil Score For Pmegp Loan Approval?
Lenders usually look for a minimum CIBIL score for a PMEGP loan of 685-700. While the government provides a subsidy, the bank's decision is based on your credit history.
Can I Get A Second Loan Under The PMEGP Scheme?
Yes. Existing units can apply for a second PMEGP loan for expansion/modernization with a project cost up to ₹1 Crore for manufacturing and ₹25 Lakh for services, with a 15-20% subsidy.
Are There Any Prepayment Charges For PMEGP Loans?
As per the RBI Directions, no prepayment charges can be levied on floating-rate loans to Micro and Small Enterprises (MSEs) for amounts up to ₹50 Lakh.
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