Introduced by the Government of India in 2008, the Prime Minister’s Employment Generation Programme is a credit-linked subsidy scheme which aims to offer financial assistance to those who are looking forward to opening up a new business under this programme.
This government initiative is an amalgamation of two earlier subsidy programmes – Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP).
Combining these two initiatives will help the PMEGP to pursue a unified approach towards increasing jobs in both urban and rural areas of the country.
Other government initiatives include the Udyog Aadhaar registration. With this scheme, small scale industry owners are entitled to gain several benefits such as subsidies, easy loan approvals, etc.
Objectives of PMEGP
Primary objectives of this subsidy scheme include –
- This subsidy programme wishes to generate job opportunities in urban and rural areas of the country by establishing new micro-enterprises, self-employment programmes, etc.
- With the help of this scheme, the Government of India aims to offer sustainable employment to traditional artisans and the unemployed youth of the country.
- The PMEGP also aims to negate the migration of rural job-seekers to urban sectors in search of employment. With the help of this subsidy scheme, individuals residing in rural areas do not have to suffer from seasonal employment.
Features of PMEGP
This government subsidy scheme provides financial assistance to individuals from various economic backgrounds.
Entrepreneurs can avail a business loan of up to Rs.25 lakh under the PMEGP programme if the business is contributing to the manufacturing sector.
In case of businesses offering services instead of products, the loan amount under PMEGP is capped at Rs.10 lakh.
For both cases, regular applicants have to pay 10% while individuals of the backward classes of the society make a 5% contribution of the total funds required to start a new project.
You can benefit from 15% to 25% of the total project cost through the PMEGP urban scheme and 25% to 35% via the PMGEP rural scheme.
The remaining funds will be sanctioned as a business loan, at regular interest rates, to the applicants to set up their new businesses.
Hence, if you are an aspiring entrepreneur looking forward to opening up a trading company, you can avail a business loan under PMEGP to set up your own trading business.
As per the guidelines of the Reserve Bank of India, loan amounts up to Rs.10 lakh do not require borrowers to pledge any collateral while applying for a loan.
However, according to Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), a trust launched by the MSME and SIDBI, financial institutions are encouraged to sanction collateral-free loans to entrepreneurs who are looking forward to setting up shop. It’s a widely accepted fact that every SME needs a solid financial plan.
Financial institutions and reputed NBFCs like Bajaj Finserv grant business loans of up to Rs.30 lakh where borrowers are not required to pledge any collateral.
Eligibility criteria of PMEGP
In order to avail a business loan under the Prime Minister’s Employment Generation Programme, you need to meet the demands the following eligibility criteria –
- Applicants need to be above the age of 18.
- Borrowers availing a business loan under this subsidy scheme have to pass the 8th
- Applicants who have already availed the benefits of other government initiatives such as PMRY, REGP, etc. are not eligible. However, enterprises who have under Udyog Aadhaar registration can apply for a PMEGP loan.
- Self-help groups such as co-operative societies and charitable trusts are also applicable eligible to avail a PMEGP loan.
Similar to the Udyog Aadhaar registration, the online application process of PMEGP is also quite simple. You will be done with the online application after providing relevant information and necessary documents.
On completion of the Udyog Aadhaar registration process, your application ID and password will be sent to your registered mobile number.
