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Loan Upto 50 Lakhs for Starting a Business

The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy programme launched by the Ministry of MSME to generate employment opportunities in both rural and urban areas. With the help of PMEGP scheme, the Government offers subsidies up to 35% on the total project cost. The project cost covered is up to Rs. 20 lakh for service units and Rs. 50 lakh for manufacturing units.

Interest RateShall vary from lender to lender
Age CriteriaMinimum 18 years or above
Maximum Project CostRs. 50 lakhs for Manufacturing Unit
Rs. 20 lahks for Service Unit
Subsidy on ProjectFrom 15% to 35%
Eligible EntitiesBusiness owners, Entrepreneurs, Institutions, MSMEs, Co-operative Societies, Charitable Trusts & Self Help Groups (SHGs)
Applicant’s Education QualificationAt least 8th class pass and further as per sole discretion of PMEGP

Prime Minister’s Employment Generation Programme (PMEGP) is integrated with two earlier schemes, viz. Prime Minister Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP) were working along similar lines to generate employment among the youth.

Under PMEGP, initiated by Govt. of India, with the help of Banks offers funding assistance to set up new enterprises. The Government has come up with a few changes to the existing scheme by increasing the maximum project cost from the existing Rs Rs 10 lakh to Rs 20 lakh for service units and Rs. 25 lakhs to Rs 50 lakhs for manufacturing units.

Under this scheme, the business owners need to invest only 5%-10% of the project cost while the Government provides a subsidy of 15%-35% of the project based on different criteria. The Banks offer funds in form of Term Loan, Working Capital Loan in form of Cash Credit and Composite Loan.

The Bank sanctions 90% of the project cost in case of General Category of beneficiary and 95% in case of Special Category. However, the credit from the bank shall range between 60-75% of the total project cost whereas the rest of the sanctioned component i.e. 15-35% of the project cost is offered as margin money subsidy under the PMEGP scheme.

The loan facility can be availed in the form of term loan, working capital loan in form of cash credit facility or composite loan for financing both working capital and capital expenditure. In case of manufacturing units, working capital component of the loan cannot exceed 40% of the project cost. In case service/trading sector units, the working capital component has been capped at 60% of the project cost.

Eligibility Criteria

  • Minimum age of the applicant should be 18 years
  • Beneficiaries shall be at least 8th standard pass educational qualification
  • Assistance available only for new projects
  • No income ceiling for assistance for setting up projects under PMEGP
  • The beneficiary needs to undertake mandatory EDP training to be eligible for sanction and release of loan to the beneficiary.

Eligible Entities

  • Business owners and entrepreneurs
  • MSMEs
  • Self-help Groups (SHGs) & Charitable Trusts
  • Societies that are registered under the Societies Registration Act of 1860
  • Production Co-operative Societies