The prime minister employment generation program or also known as the PMEGP loan is an initiative launched by the government of India-backed credit linked subsidy scheme. In this scheme, beneficiaries can get a subsidy amounting to 15-30% of the cost of the project from the government.
The Khadi and village industries commission (KVIC) implemented this scheme at a national level but is an initiative of micro, small and medium enterprises. This scheme is most useful to budding entrepreneurs, who lack the funds to start their businesses, PMEGP loan can provide you with the financial assistance required to set up a new project.
Let us understand a bit more about the PMEGP loan launched by the government
To understand the fundamentals of this loan, let us first understand its objectives:-
1. The PMEGP loan scheme helps in providing employment opportunities in India’s urban and rural areas by taking the initiative to establish new self-employment projects, micro-enterprises, and ventures.
2. To help facilitate self-employment opportunities for widely dispersed artisans/ unemployed rural and urban youth to the degree feasible at their location
3. To generate sustainable employment for rural and unemployed youths so that they don’t migrate to urban areas
4. To boost income earning capacity and spur the growth rate of rural and urban employment
The PMEGP loan limit is Rs.9.5 lakh to Rs.23.75 lakh. The maximum cost for the manufacturing sector is Rs.25 lakh and the maximum cost for the business/service sector is Rs.10 lakh. The beneficiary makes a 5 to 10% contribution and the bank sanctions the remaining 90 to 95%.
Whereas, in actuality, your bank credit will amount to 60% to 75% of the project’s cost as you receive the remaining 15 to 35% as margin money through the PMEGP scheme. Banks provide the balance amount of the project’s cost of term loan.
Projects costing up to 10 lakhs do not require any collateral as per the RBI guidelines. For projects costing from 5 lakhs to 25 lakhs, CGTMSE provides a collateral guarantee. The PMEGP loan guarantee may be different for projects costing above 10 lakhs, as you may need to provide security as per your lender’s terms.
The interest rates under the PMEGP scheme are 11 to 12% (varies)
Here are lists of individuals who can apply for funding new projects under the PMEGP scheme
1. Any individual who is 18 years of age
2. The person must have passed at least 8th grade for manufacturing sector projects costing above 10 lakhs and 5 lakhs for the business sector
3. Self-help groups (even those falling under BPL provided that the SHG has not obtained benefits under any other scheme
4. Institutions registered under the societies registration act, of 1860
5. Production co-operative societies
6. Charitable institutions.
Here are some of the documents required for applying for a PMEGP loan
1. Aadhaar card
2. PAN card
3. Project report
4. Special category certificate, if required
5. Rural area certificate
6. Education/skill development/EDP certificate
7. Authorization letter
1. To start with PMEGP online, start by going on the e-portal
2. Click on the “online application form for individual/online application form for non-individual”
3. Fill out entire details like name, sponsoring agency, type of activity, first financing bank, and so on
4. When done, click on “click application data”
5. Then, upload documents and prepare for final submission
6. Post final submission, you will get an application ID and password sent to your registered mobile number
These are steps to fulfill to make PMEGP online application
The maximum loan limit for a project is Rs. 50 lakh for the manufacturing unit and Rs. 20 lakh for the service unit.
No, collateral is not required for projects costing up to Rs. 20 lakh under the PMEGP scheme. The CGTMSE provides a collateral guarantee for the project beyond Rs. 5 lakh and up to Rs. 50 lakh under the PMEGP scheme.
The margin money is the same as the Govt. subsidy and ranges from 15% – 35% of the total project cost.
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