Starting a business is a dream for many, but lack of funds often becomes the biggest hurdle. To solve this problem, the Government of India introduced the Prime Minister’s Employment Generation Programme (PMEGP). This scheme provides financial support to individuals and small businesses to set up new ventures in the manufacturing and service sectors.
If you are planning to become an entrepreneur, here is everything you need to know about the PMEGP loan.
What is PMEGP Loan?
The PMEGP loan is a credit-linked subsidy scheme designed to promote self-employment. It offers financial assistance for new projects, enabling entrepreneurs to set up industries and service units, while also creating job opportunities.
Who Can Apply?
Anyone with the following eligibility can apply:
Individuals aged 18 years and above.
Minimum educational qualification: 8th pass (only required for projects above ₹10 lakh in manufacturing or ₹5 lakh in services).
Self-help groups, charitable trusts, cooperative societies, and registered institutions are also eligible.
Project Cost Limit
Manufacturing units – up to ₹50 lakh.
Service units – up to ₹20 lakh.
This makes the scheme suitable for both small and medium-sized business ideas.
Contribution and Subsidy
The loan works on a shared funding model:
Own contribution (Margin Money):
General category: 10% of project cost.
Special categories (SC, ST, OBC, Women, PH, NER, ex-servicemen, etc.): 5% of project cost.
Government subsidy (non-refundable):
Urban areas: 15% for general category, 25% for special categories.
Rural areas: 25% for general category, 35% for special categories.
Remaining amount: Funded by banks as a term loan and working capital.
Key Benefits of PMEGP Loan
Easy access to credit for new entrepreneurs.
Government subsidy reduces repayment burden.
Encourages self-employment and small industries.
Supports both manufacturing and service sector projects.
Higher benefits for women, SC, ST, and weaker sections.
Application Process
- Prepare your business idea and project report.
- Fill the online application form through the official PMEGP portal.
- Upload documents like ID proof, educational certificate, and project details.
- Your application will be reviewed by the District Level Task Force Committee.
- Once approved, the loan is sanctioned by a bank.
- Government subsidy is released to the bank after loan disbursement.
Documents Required
Aadhaar Card and PAN Card.
Educational qualification proof (if applicable).
Address proof.
Caste certificate (for special categories).
Passport-size photographs.
Detailed project report of your business idea.
Final Thoughts
The PMEGP loan is one of the most powerful schemes for aspiring entrepreneurs in India. It not only provides financial support but also motivates individuals to create employment opportunities. If you have a strong business idea and the passion to succeed, this scheme can give you the right start.
