What is the PMEGP scheme and how can you get it?

Financial assistance is critical not only for starting a business but also for its survival and growth. There are various ways for a new business or an MSME to gain capital funding. However, there is nothing better than availing it from a credible and secured source. The Prime Minister’s Employment Generation Programme (PMEGP) is a government scheme that provides financial assistance to MSME to fulfil their business needs. Let’s have a look at the PMEGP scheme in more detail.

What is the PMEGP Scheme?

Launched in 2008, the Prime Minister’s Employment Generation Programme is a Government of India (GOI) initiative to provide monetary assistance to micro, small & medium enterprises (MSME) and generate employment. It is an amalgamation of two earlier running schemes of the GOI, namely the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP). Both these schemes had goals similar to that of the PMEGP scheme.

As per the scheme, the business owner needs to bear 5% to 10% of the total cost while the GOI provides a subsidy of 15% to 35% of the project after taking several factors into account. Moreover, the rest of the amount is provided by the financial institution in the form of a term loan. Khadi and Village Industries Commission (KVIC) is responsible for the management of the PMEGP scheme.

How can you get a loan under the PMEGP scheme?

In order to avail of the benefits of the scheme, the businesses need to fill in the application for the same. In the application, one needs to provide the details of business establishment, details of the project, and other necessary documents. Your application must fall under the jurisdiction of any of the four objectives of the PMEGP project. These are:

• Creating employability by establishing MSME projects in rural or urban spaces
• To support and promote ethnic craftsmanship or artisans and to create self-employment opportunities for youth.
• Enhance employment opportunities in the rural areas to prevent migration to cities and minimise seasonal unemployment
• Increase the per capita income of the individuals in both urban and rural areas

Documents Required to apply for a PMEGP Loan

Here is the list of documents that you will be asked to submit along with the application form.

1. Aadhar card
2. PAN card
3. Project report
4. Caste/Special category (if needed)
5. Rural Area certificate
6. Letter from the authority
7. Educational certificate and others

Eligibility criteria for getting a loan under the PMEGP Scheme

For your application to undergo the PMEGP loan process, you must fulfil the eligibility conditions of the funding. These are:

• You must be an adult i.e. you should be of 18 years at least.
• The minimum educational qualification for the applying PMEGP loan is class 8th pass i.e. must have completed the primary education to get a loan of Rs. 5 lakh or more to set up a service unit and Rs. 10 lakh or more to set up a manufacturing unit.
• Below poverty line beneficiaries who haven’t got the benefit of any other scheme
• Self-Help Groups
• Charitable Trusts & Production Co-operative Societies
• Loan under the PMEGP scheme will be provided for new ventures only

PMEGP Loan Details

In this section, we will discuss details of the loan process like allocation of funds, interest rate, tenure, and so on.

1. Loan Allocation: Once the loan is approved, the financial institution will fund up to 95% of the project. The remaining amount must be paid by the candidates. Out of 95% of the funding of the financial institutions, KVIC will provide up to 15% to 35% of the amount as a subsidy.
2. Rate of Interest: The interest rates on the term loan will be applicable as per the rates of interest of the MSME sector.
3. Loan Tenure: The repayment tenure of the PMEGP loan can go up to 3 years.
4. Businesses under the PMEGP Scheme:
   • Agriculture & Food Processing
   • Forest-Based Products
   • Hand Made Paper and Fibre
   • Mineral Products
   • Polymer and Chemical Products
   • Rural Engineering and Bio-Tech
   • Service and Textile

You can also check further in-depth details regarding the PMEGP loan on the KVIC website.

Why choose FlexiLoans for the PMEGP scheme?

FlexiLoan is a fintech company that provides a line of credit to businesses so that they can sustain, grow and expand their horizons. We use an alternate method of credit assessment to provide loans even to borrowers with marginally weak credit history. FlexiLoans cater to all your business needs irrespective of the size or location of the business. You can reach out to us for any kind of financial assistance. We use artificial intelligence for faster processing of the loans and transfer the amount instantaneously after the document verification.

Benefits of availing of the PMEGP loans from FlexiLoans

• Minimum documentation: Enables faster and hassle-free processing of the loan amount
• Need-based funds: Easily available along with a range of flexible options utilize the loan amount
• Easy repayment terms: We use cutting-edge technologies to inculcate automated repayments to ease out your burden.
• Unlimited number of withdrawals: Use funds as you want, and don’t worry about the amount or number of withdrawals.
• Low rate of interests: Competitive business loan rate of interest compared to any other lender or financial institutions providing a line of credit to the businesses
• Tax benefits: Since the interest amount is deducted from the gross income, enterprises can also claim tax deductions

Eligibility Criteria of FlexiLoans

There are 3 basic business loan eligibility criteria that one needs to fulfil to avail of the business loans online from FlexiLoans. These are:

1. Age Criteria: Minimum 21 years of age
2. Business Life: Your business must be a year old
3. Monthly Turnover: The business should have a monthly turnover of 2 lakhs

Conclusion

In your vision of business expansion, the PMEGP scheme list can act as a big boost, especially if you are starting a new business. The subsidy from the government can drastically reduce the burden of paying EMIs. The PMEGP loans also eliminate the need for collateral that comes in handy for new businesses. You can reach out to us to be a financial partner in the scheme at any time. We are just a click away from your reach!

Frequently asked questions

Q. Who can apply for the PMEGP loan scheme list?

Ans. Applicants who are minimum 18 years of age and have passed VIII standard can apply for loan under the PMEGP scheme.

Q. What is the maximum amount that one can avail of under the PMEGP loan scheme list?

Ans. Under the PMEGP scheme, you can get a maximum Rs. 25 lakh loan for setting up a manufacturing unit and Rs. 10 lakh for setting up a service unit.

Q. Are there any collateral requirements for the PMEGP loans?

Ans. The MSME ministry provides the collateral guarantee for the applicants under the PMEGP scheme. Moreover, there is no need to submit collateral for projects that cost up to Rs. 10 lakh under the PMEGP scheme.

Q. How much margin money or government subsidy is applicable under the scheme?

Ans. It varies for each applicant based on his or her eligibility and several other factors. In general, the government subsidy ranges from 15%-35% of the total project cost.

Q. What is the usual processing time of the PMEGP loan?

Ans. In order to apply for the loan, the applicant needs to undergo a training period of 16 days. Once the training is completed, it takes around 2 months to process all the formalities.

Q. Can I get a PMEGP loan while living in an urban region?

Ans. Yes, the PMEGP loan can be availed by individuals living in both urban or rural regions. However, the location of the business impacts the subsidy amount. As per the PMEGP scheme rules, an individual from the general category who lives in cities will get a subsidy of 15% while if he lives in a rural area, the subsidy will be 25%. For individuals from the weaker sections, the subsidy in an urban space is 25%, and it is 35% in rural space.

Q. What is margin money under the PMEGP scheme loan?

Ans. It refers to the amount that one gets as a subsidy from the Khadi and Village Industries Commission on applying for the PMEGP scheme. It reduces the loan burden of the individual and is given to the financial institution that has agreed to be the partner of the scheme. The margin money is kept for a lock-in period of 3 years in the financial institutions.

Q. How much does the PMEGP project report cost?

Ans. The PMEGP project report contains the details of the expenditure and the working capital requirements for a season. It includes all the cost details of leasing, renting, and other requirements for a maximum period of 3 years. The PMEGP report cost consists of contribution by the individual, the bank’s contribution and the government subsidy. For an individual from the general category, the project cost is 10% of the project’s total worth and 5% for someone from a special category. It doesn’t include the cost of the land.

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