The Prime Minister’s Employment Generation Programme (PMEGP) introduced by the Government of India in the year 2008 is a credit-linked subsidy scheme.
It is a merger of two other central government schemes, which were – Prime Minister’s Rojgar Yojana and Rural Employment Generation Programme.
PMEGP primarily focuses on the generation of self-employment opportunities for unemployed youth in rural as well as urban areas. It provides financial assistance in the form of PMEGP loans to eligible applicants to help them set up a new project or business of their own.
The PMEGP scheme, its eligibility criteria, loan rates, application procedure and loan limits are administered by the Ministry of Micro, Mini and Small Enterprises. KVIC or the Khadi and Village Industries Commission implements this programme at the national level.
As for the state level, the programme falls under the State Khadi and Village Industries Boards, State Khadi and Village Industries Commission Directorates, District Industries Centres and various financial institutions.
Features of the PMEGP loan scheme
As per RBI guidelines, projects costing up to Rs.10 lakh do not require a security or collateral. Under PMEGP, projects costing more than Rs.10 lakh might require collateral, depending on the terms and conditions set by the lender.
Other than this, the other features of the PMEGP scheme are-
- Assistance under the scheme is available only for new projects that are yet to be established.
- PMEGP loan details do not specify any income ceiling for setting up new projects.
- Units already availing subsidy from the central or state government are ineligible to avail this loan.
- The per capita investment under PMEGP must not exceed Rs.1 lakh in plain areas and Rs.1.5 lakh in hilly areas.
- The project cost limit set under this scheme is Rs.10 lakh in the service sector and Rs.25 lakh in the manufacturing industry.
Considering all the features of PMEGP loan, it is a suitable way to get small business finance for new projects.
Eligibility criteria required to avail PMEGP loan
The following individuals and entities are eligible for PMEGP application-
- Individual aged above 18 years
- For a project costing above Rs.5 lakh in the service sector and Rs.10 lakh in the manufacturing sector, individuals must have a minimum qualification of standard VIII.
- Production-based co-operative societies.
- Institutions which are registered under the Societies Registration Act of 1860.
- Various self-help groups and charitable trusts.
PMEGP loan interest rate ranges between 11 to 12%. The repayment tenor set under this scheme varies from 3 to 7 years.
The credit provided under the programme will amount only to 60-75% of the total cost of a project. You will receive the remaining 15-35% of the fund as margin money through PMEGP. Financial institutions provide the remaining amount as a term loan.
While PMEGP loan is one of the best ways to finance your business, it is available only to establish a new business.
In cases where you need funds for business expansion and growth, you can prepare your organisation for a business loan. By doing so, you can avail sufficient funds even without having to pledge any collateral.
Establishing a business is not an easy task. It requires proper planning and financing. Not only in the initial phase, but a company might even face financial challenges after its establishment.
An entrepreneur can rely on a business loan in such scenarios and avail required funding from their preferred financier.
Further, lenders like Bajaj Finserv also bring pre-approved offers for improved convenience. The offers help you avail loan facilities faster and in a hassle-free manner.
Eligible youths can fill up the PMEGP online application to gather funds for their new business initiatives. Best business ideas in India can be backed with government subsidy schemes like PMEGP, and so on.
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