Funding & Schemes
PMEGP Loan and Subsidy: How to Start a New Micro Enterprise
By ATTPL Consultancy Marketplace Editorial Team · · 2 min read
How the PMEGP scheme works for new micro enterprises: eligibility, project cost limits, margin money subsidy, own contribution, application steps and tips for approval.
What PMEGP is
The Prime Minister's Employment Generation Programme (PMEGP) is a central credit-linked subsidy scheme for setting up new micro enterprises in manufacturing, services and trading activities that are allowed under the scheme. The Khadi and Village Industries Commission (KVIC) is the national nodal agency, working with state KVIBs and District Industries Centres. A bank gives the loan and part of the project cost is covered by a margin money subsidy.
Key features in brief
- Maximum project cost: about Rs 50 lakh for manufacturing and Rs 20 lakh for service units, as per the guidelines in force
- Margin money subsidy: generally 15 per cent (urban) and 25 per cent (rural) of project cost for general category; 25 and 35 per cent for special categories such as SC, ST, OBC, women, minorities, ex-servicemen and persons with disabilities
- Own contribution: about 10 per cent for general and 5 per cent for special categories
- Only new projects qualify; existing units and units already availing other government subsidy are not eligible
- Applicants must be at least 18 years old, with an educational qualification required for larger projects
The scheme's period and terms are approved for fixed cycles, so check that it is open and read the current guidelines on the KVIC PMEGP portal before applying.
How to apply
- Choose a viable activity and prepare a realistic project report
- Apply online on the PMEGP e-portal with identity, address, education and category documents
- The application is scrutinised by the implementing agency and forwarded to the bank you select
- After sanction, complete the entrepreneurship development training required under the scheme
- Release of loan, and the subsidy is kept in the bank for the lock-in period before adjustment
Register on Udyam after the unit starts; see Udyam registration.
Tips for approval
Banks look at the market, your experience, the cost estimates and repayment capacity. Get quotations for machinery from genuine suppliers, keep working capital realistic, and show how you will sell. If you need a larger or collateral-free loan outside PMEGP, read about CGTMSE cover and other government subsidies. Beware of agents who promise guaranteed approval for a fee; applications are made on the official portal.
How ATTPL Consultancy can help
ATTPL Consultancy helps first-time entrepreneurs in Jaipur and Rajasthan choose an activity, prepare project reports, complete registrations and apply to schemes. Startups can also explore the ATTPL consultancy marketplace.
Frequently asked questions
Can an existing business get a PMEGP loan?
PMEGP is for new units. Existing PMEGP units with good performance may be eligible for a second loan for upgradation under the scheme's rules.
Is collateral required for a PMEGP loan?
Guidelines provide for loans without collateral up to specified limits, with credit guarantee support, but banks follow their own appraisal. Check with your bank.
Where do I apply?
On the official PMEGP e-portal run by KVIC; there is no need to pay agents.
Sources and further reading
This article is general information, not financial or legal advice. Scheme terms, limits and timelines change; confirm details on official portals and with your bank before applying.