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Loan up to 50 lakhs, 35% subsidy for startups; Who is eligible? Exploring the PMEGP Scheme

A Comprehensive Guide to Prime Minister's Employment Generation Scheme (PMEGP) and Its Benefits

The Prime Minister’s Employment Generation Scheme (PMEGP) stands out as the premier loan scheme tailored for aspiring entrepreneurs in India. With unmatched subsidy benefits and comprehensive assistance, PMEGP has been a cornerstone of central government initiatives since its inception in 2008.

Key Benefits

Unlimited loans are extended to construction service enterprises. However, the maximum subsidy is Rs 50 lakh for manufacturing firms and Rs 20 lakh for service firms. Notably, special sections enjoy a subsidy of 35 percent in rural areas and 25 percent in urban areas. The general category receives a 25 percent subsidy in panchayat areas and 15 percent in municipal-corporation areas.

Special Category Preferences

Special categories, including women, SC-ST, OBC, religious minorities, disabled, and veterans, are accorded priority. Upon receiving the subsidy amount, it must be held as a fixed deposit in the bank for three years. Subsequently, the subsidy amount is credited to the loan account after the enterprise performance evaluation. Additionally, the stipulation mandates the interest rate to remain consistent on both the subsidy and loan amounts.

Eligibility Criteria

Individuals must be 18 years or older, with no upper age limit. The minimum requirement of an 8th class pass applies to construction companies above Rs 10 lakhs and service establishments exceeding Rs 5 lakhs. Partnership firms and limited companies are ineligible for loans. Excluded sectors encompass agriculture farms, vehicles, tobacco, liquor, meat, testing labs, training institutes, and gymnasiums.

Expansion of Poultry-Fish Farms

An important amendment includes the provision of loans to poultry-fish farms. Furthermore, loans are accessible for vehicles, vegetarian-non-vegetarian hotels, dairy farms, buffalo-goat-camel-horse-donkey farms, and poultry-turkey-duck-beekeeping ventures.

Reservations and Training

A 30 percent reservation is earmarked for women, with allocations of 27 percent for OBCs, 9.1 percent for SCs, 1.45 percent for STs, 5 percent for religious minorities, and 3 percent for disabled persons. Entrepreneurship training is optional for firms investing up to Rs 2 lakhs, while investments between Rs 5 lakh and Rs 10 lakh mandate training eligibility for subsidies.

Repayment and Application

Repayment periods range from three to seven years, while a job creation requirement exists for fixed deposits up to Rs three lakhs. Applications are accepted by all implementing institutions, irrespective of rural-urban categorization. Entities such as the Khadi Board, Khadi Commission, and Coir Board can also process applications in municipal areas. The nodal agency for PMEGP implementation since 2008 remains the Khadi and Village Industries Commission (KVIC), Khadi Board (KVIB), Coir Board, and District Industries Centers (DIC).

Expansion Opportunities

In a significant development, borrowers are now eligible for expansion loans, with a second loan of up to Rs 1 crore for construction startups and up to Rs 20 lakh for service startups.

Online Application Process

Prospective applicants are encouraged to apply online through the designated website.

In conclusion, the PMEGP continues to serve as a beacon of hope for budding entrepreneurs across India, empowering them with financial assistance and resources to realize their dreams of business ownership and economic independence.

Hisham Nazar

Hisham Nazar, a seasoned financial expert, is committed to empowering individuals to seize control of their financial destinies. Armed with an MBA in Finance from Jawaharlal Nehru University, New Delhi,… More »

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