About PMEGP Loan Scheme

PMEGP, or the Prime Minister’s Employment Generation Programme, is a credit-linked subsidy scheme launched by the Ministry of MSME to generate employment in the non-farm sector by establishing micro-enterprises in rural and urban areas. It provides financial assistance in the form of margin money (subsidy) and bank loans to help entrepreneurs start new self-employment ventures. The scheme aims to boost entrepreneurship and create sustainable employment opportunities for unemployed youth and traditional artisans, with implementation handled by the Khadi and Village Industries Commission (KVIC).  

 
        Key Aspects of PMEGP
  • Objective: 

    To generate employment by setting up new micro-enterprises, primarily in the non-farm sector. 

     
  • Implementation: 

    Administered by the Ministry of MSME and implemented by the KVIC at the national level, along with State KVIBs and District Industries Centers (DICs) at the state and district levels. 

     
  • Financial Assistance: 

    It’s a credit-linked subsidy program where the government provides a subsidy (margin money) and banks provide term loans and working capital for eligible projects. 

     
  • Project Cost:
     
  • Manufacturing Sector: Up to ₹50 lakh. 
     
     
  • Business/Service Sector: Up to ₹20 lakh. 
     
     
  • Beneficiary Contribution: 

    The entrepreneur is required to contribute a certain percentage of the project cost (e.g., 5-10% for the general category). 

     
  • Eligible Beneficiaries: 

    Unemployed youth, traditional artisans, beneficiaries from special categories (SC/ST/OBC, women, etc.), and self-help groups. 

     
         How it Works
  • Application: Entrepreneurs apply for a loan under the PMEGP scheme. 
     
  • Project Sanction: A project proposal is developed, and the KVIC, KVIBs, or DICs help in its formulation and approval. 
     
  • Loan Sanction: Banks sanction the loan based on the project’s viability. 
     
  • Subsidy Disbursal: The government subsidy (margin money) is routed through KVIC to the beneficiary’s bank account after physical verification and completion of a lock-in period. 

        Required Documents for the application

  • Mandatory Documents: Aadhar card, PAN card, Passport size photo, Educational Certificate, Bank Passbook Front Page, Rural Area Certificate (For rural areas only)
  • Optional Documents: Rasan Card, Electricity bill, Residential Certificate, Experience Certificate, Skill Certificate, Income tax returns for 3 years, GST registration/Shop Registration/MSME registration Certificate, etc.
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