PMEGP Loan Scheme
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Sachin Vashishth
(Managing Director)
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- Projectfinancer@yahoo.co.in
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Prime Minister’s Employment Generation Programme (PMEGP) aimed at generating employment opportunities in rural and urban areas through the establishment of new self-employment ventures or projects or micro-enterprises. The PMEGP scheme offers a subsidy in the form of a money margin that ranges from 15% to 35% of the project cost, depending on the category and location of the beneficiary. The beneficiary has to contribute 5-10% of the project cost as their contribution. The remaining amount of the project cost is financed by banks. The scheme also offers a 2nd PMEGP loan for expansion or upgradation in the existing/related activities of well-performing PMEGP or MUDRA units.
PMEGP Scheme Highlights | |
Repayment Tenure | 3 years to 7 years |
Age Criteria | Above 18 years |
Maximum Project Cost | For availing first PMEGP loan – Rs.50 lakhs for the Manufacturing Unit; Rs.20 lakhs for the Service Unit |
For availing second PMEGP loan – Rs.1 crore for the Manufacturing Unit; Rs.25 lakhs for the Service Unit | |
Subsidy on Project | From 15% to 35% |
Lock-in period of claiming Government Subsidy | 3 years after the successful physical verification |
Applicant’s Education Qualification | At least 8th class pass to set up a project costing over Rs.10 lakh in the manufacturing sector and over Rs.5 lakh in the service/business sector. |
WHAT IS PMEGP SCHEME
FEATURES OF PMEGP SCHEME
Repayment Tenure
The repayment tenure ranges from 3 years to 7 years after an initial moratorium as may be prescribed by the concerned financing bank or financial institution.
PROJECT COST
For setting up new enterprises
The maximum cost of the project for new enterprises allowed for Margin Money subsidy is as follows:
Sector
Maximum Project Cost Allowed
Manufacturing
Rs.50 lakhs
Business/Service
Rs.20 lakhs
For Existing PMEGP/REGP/MUDRA Units (2nd Loan For Upgradation)
The maximum cost of the project for upgradation allowed for margin money subsidy is as follows:
Sector
Maximum Project Cost Allowed
Manufacturing
Rs.1 crore
Business/Service
Rs.25 lakhs
The capital expenditure, including the cost of construction, should account for up to 60% of the total project cost, while the working capital cost should be up to 40%. However, the financing bank can determine the criteria for loan sanction based on the nature of the project at the time of approval.
The banks will cover the balance amount (excluding the beneficiary’s contribution) of the total project cost. Also, if the total project cost exceeds the maximum ceiling limit, banks may provide the balance amount without government subsidy for both the existing and new units.
Collateral
The project cost of up to Rs.10 lakhs is free from collateral security under PMEGP loans.
Margin Money Subsidy
Margin money (subsidy) will be a ‘one-time assistance’. The subsidy is not available for any enhancement of credit limit or modernization or expansion of the project, except in case of units selected for upgradation through 2nd loan under this Scheme. The PMEGP units are required to be registered under the UDYAM Portal before the adjustment of Margin money in the loan account.
Projects financed jointly, i.e. from two different banks or financial institutions, are not eligible for margin money assistance.
Rate of Subsidy For Setting up of New Enterprise or Unit
Categories of Beneficiaries (for setting up of new enterprises)
Beneficiary’s
contribution
(of project cost)
Rate of (margin money) Subsidy (of project cost)
Area (location of project/unit)
Urban
Rural
General Category
10%
15%
25%
Special (including ST/SC/OBC /Minorities/ Ex-servicemen, Physically handicapped, Aspiration Districts, NER, Women/Transgender, Hill and Border areas, etc.
5%
25%
35%
Rate of Subsidy for existing PMEGP/REGP/MUDRA units (2nd Loan for upgradation)
Categories of beneficiaries Beneficiary’s Rate of (margin money
Under PMEGP contribution Subsidy (of project cost)
(For upgradation of existing units) (of project cost)
All Categories 10% 15%
(20% in NER and Hill States)
EDP TRAINING
PMEGP LOAN ELIGIBILITY CRITERIA
For PMEGP new enterprises (Units)
Stated below are the eligibility criteria for setting up new enterprises under the PMEGP scheme.- 1. Minimum Age: Above 18 years of age
- 2. Income Criteria: No income criteria are required for setting up projects under PMEGP
- 3. The applicant or beneficiary (individual entrepreneurs) must have at least VIII standard educational qualification to set up a project costing over Rs 10 lakh in the manufacturing sector and over Rs 5 lakh in the service or business sector.
- 4. PMEGP loan is offered to new viable microenterprises, including village industries projects except activities prohibited by local Government/Authorities due to environmental or socio-economic factors and those mentioned in the negative list of the guidelines.
- 5. Existing Units and the units that have already availed any Government Subsidy (such as PMRY, REGP, CMEGP, PMEGP or any other scheme of the Government of India or State Government) are not eligible for the PMEGP scheme
- 6. Projects without Capital Expenditure (Term Loan) are not eligible for this scheme
- 7. The cost of land is not allowed to be included in the project cost. The cost of a pre-built shed and a long-term lease or rental for a workshed/workshop can be included in the project cost, but only for a maximum period of 3 years.
- 8. All Implementing Agencies (KVIB, DIC, KVIC and Coir Board) can process applications in both rural and urban areas.
- 9. Applicant should have valid Aadhaar Number
- 10. Applicant is required to give his/her consent to authenticate demographic details such as Name, Gender, Aadhaar number, Mobile number and Date of Birth from UIDAI server.
- 11. Only one person from one family is eligible for availing PMEGP loan for setting up projects under the scheme. The ‘family’ includes self and spouse.
For up-gradation of existing PMEGP/REGP/MUDRA units:
Stated below are the eligibility criteria for availing second PMEGP loan for the upgradation of existing units financed under PMEGP/MUDRA Scheme:- 1. Margin Money or subsidy claimed has to be successfully adjusted on the completion of the lock-in period of 3 years.
- 2. The first loan under the PMEGP or REGP or MUDRA scheme has to be fully repaid in the stipulated time
- 3. The beneficiary has the option to apply for a second PMEGP loan from the same financing bank that provided the first loan, or from any other bank willing to extend a credit facility.
- 4. The unit has been profitable for the last 3 years and has the potential for further growth in turnover and profit through modernizing or upgrading the technology.
- 5. UdyogAadhaar Memorandum (UAM) registration is mandatory
- 6. The second loan should provide additional employment generation
Activities not allowed under PMEGP Scheme – Negative List
-
- 1. Any industry/business connected with meat (slaughtered),i.e. processing, canning and/or serving items made of it as food, production/manufacturing or sale of intoxicant items like Cigar/Beedi/Pan/Cigarette etc., any Hotel or Dhaba or sales outlet serving liquor, preparation or producing tobacco as raw materials, tapping of toddy for sale. However, serving or selling non-vegetarian food at Hotels or Dhabas will be allowed under the scheme.
- 2. Activities prohibited by Local Government/Authorities due to environmental or socioeconomic factors
- 3. Manufacturing of polythene carry bags of less than 75 microns thickness and manufacture of carry bags or containers made of recycled plastic for carrying, dispensing storing or packaging of food stuff and any other item which causes environmental problems. The thickness of polythene carry bags shall be governed by the Ministry of Environment, Forest and Climate Change notification for plastic waste management rules and amendments from time to time.
- 4. Any industry or business connected with the cultivation of crops or plantations such as tea, coffee, rubber etc. horticulture, floriculture, animal husbandry, sericulture (cocoon rearing) will not be allowed. However, value addition under these categories will be allowed for availing loan under the scheme. Off Farm or Farm Linked activities in connection with horticulture, sericulture, floriculture etc. will also be allowed.
Listed below are the industries or businesses connected with animal husbandry allowed under the PMEGP scheme:
- 1. Dairy – Milk and other dairy products through cows (primarily), sheep, goats, horses, camels, buffaloes and donkeys.
- 2. Poultry – Poultry, kept for their eggs and for their meat, include turkeys, geese, chickens and ducks.
- 3. Aquaculture – it is the farming of aquatic organisms including molluscs, crustaceans, fish and aquatic plants
- 4. Insects – including Bees, Sericulture, etc.
Documents Required for PMEGP Loan
Stated below is the list of scanned documents (up to 1 MB) required for the online PMEGP loan application.
- 1. Passport Size Photo
- 2. Project Report Summary or Detailed Project Report
- 3. Highest Educational Qualification
- 4. Rural area certificate (if applicable)
- 5. Social or Special Category Certificate (if applicable)
For existing PMEGP/REGP/MUDRA units (2nd Loan for upgradation)
- 1. Previous loan sanction letter’ issued by the Bank
- 2. Proof of ‘Money Margin claims adjusted against the previous loan’ and ‘Bank Certificate for full loan repayment’.
- 3. Project report for expansion or upgrading the unit.
- 4. Passport size photograph.
- 5. Last 3 years ITR returns
- 6. Last 3 years Annual accounts certified by Chartered Accountant
About Us
Sachin Vashishth
(Managing Director)
Contact Info
- +91-9810454531
- Projectfinancer@yahoo.co.in