PMEGP Loan Scheme-Meaning and Purpose
The Prime Minister Employment Generation Programme (PMEGP) is a subsidy linked loan scheme which seeks to encourage spirit of entrepreneurship among the population through launch of smaller business units across rural as well as urban areas. The initiative encourages entrepreneurs to create and offer sustainable employment prospects especially in rural and backward areas of the country.
Loans offered under the PMEGP scheme could be availed through eligible nationalized private and public sector banks including NBFC’s. The interest rate and subsidy granted for loans by various financial institutions vary depending upon the bank policies, applicant’s background, financial status of the business and cost of the project.
Further, the scheme offers additional higher subsidies for particular categories such as SC/ST/Women/Minority Groups/Handicapped/Ex-servicemen and people from Northeast areas/Hilly areas/ and border districts.
Key Objectives of the PMEGP Scheme Include-
- Setting up new businesses/micro units and launching new projects to create employment opportunities in rural areas as well as cities.
- Connecting traditional craftsmen from different areas and offer employment opportunities to unemployed youth and empower them for self-employment.
- Increasing the earning capacity of workers and artisans through contribution in the growth rate of rural and urban employment.
- Reducing youth migration of unemployed population from rural to urban region including traditional artisans by offering continual and long-term employment opportunities.
PMEGP Loan for SMEs and MSMEs
PMEGP Scheme-Eligibility Criteria
| Age Limit and Education | Individuals shall not be younger than 18 yrs in age. All the beneficiaries shall have the basic educational qualification of eighth standard or more. |
| Income Limit | There is no income limit specified to be eligible to avail loans under this scheme. |
| Limit of Financial Assistance under PMEGP Scheme (for newly established units) | For launching a project under manufacturing industry, a limit of Rs. 10L will be applicable.
For launching a business project in the service industry, a limit above Rs. 5L will be applicable. |
| Conditions | Only new projects approved explicitly under the PMEDP scheme will be eligible for financial assistance under the scheme.
Existing businesses who have been benefitted already under any similar government programs shall not be eligible to avail subsidy under PMEGP scheme. |
| Up-gradation of existing PMEGP / REGP / MUDRA units’ conditions | Subsidy granted under the PMEGP Scheme shall be effectively adjusted after the conclusion of the three-year lock in period.
Repayment of the initial loan granted under PMEGP/REGP/MUDRA scheme should have been completed satisfactorily within the agreed period. The business is running profitably and has higher potential to grow turnover through up-gradation. |
PMEGP Scheme-Documents Required
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- Copy of documents like Aadhaar, PAN, Voter Id, Passport, etc. for identification proof.
- Copy of documents such as electricity bill or water bills, Property tax receipt, ration card, etc.
- Copy of caste certificate if the applicant belongs to SC/ST/OBC category;
- Rural area certificate
- Copy of certificates establishing any specific education background/ Skill training, or Executive Development Programme.
- Copy of Bank Statements
- Recent passport sized applicant photographs.
- Detailed project report.
PMEGP Scheme Application Process
- Go to the official PMEGP portal (https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp) and click the application form to download it in the pdf format.
- Now, fill the required information and attach necessary documents to be posted to the relevant KVIC/KVIB/DIC office.
- Upon submission an acknowledgement receipt will be generated which should be referred to for application tracking.
Tips to Ensure Loan Approval Under PMEGP Scheme
- Incomplete Documentation- In order to ensure that the PMEGP application is not rejected out-rightly, ensure that the application is filled out and all necessary papers are attached with the application. If any of the documents are missing or contain any error could further delay the process. Hence, always double -check to verify that the documentation satisfies the scheme standards.
- Lack of detailed project report- Another typical error in the PMEGP applications is a generalized or badly written project report that may lower chances of loan approval. To avoid such mistakes, include all information such as expected earnings, marketing strategies, breakdown of expenses, etc. from the business plan.
- Ineligible business proposal- If the business plan submitted under the PMEGP scheme fails to meet the eligibility requirements under the scheme, the application is likely to be rejected. Hence, make sure to review the list of activities qualified under the scheme.
- Errors in application form- Inaccurate personal information, incompatible data or errors, etc. will lead to delay in application approval. Review carefully before submitting the application.
- Failure to track application- Always make sure to track your application submitted under the PMEGP scheme in regard to the application status. Tracking applications will cause any query to be replied promptly and faster loan approval.
- Unrealistic financial projections- Sometimes, business owners may overstate their profits or underestimate expenses which may result in the application being either stalled or turned down by authorities. It should be noted that the application should always be accurate and supported by solid research.
Final Thoughts
A final application and securing of the PMEGP loan requires thorough preparation of business plans, precise documentations and being compliant with various eligibility norms. It will be prudent for the business owners to avoid common mistakes in the application journey to avail all benefits under the PMEGP scheme. Apart from this there are other government schemes that help businesses in their entrepreneurial dreams, like the CGTMSE scheme etc. For managing your loans and reducing the cost of borrowing, you may get in touch with experts like BankKeeping, who can help you through your loan journey through its SaaS based unique offerings.