How to Apply for PMEGP Loan — Prime Minister Employment Generation Programme

Looking to start your own business with government subsidy support? The Prime Minister Employment Generation Programme (PMEGP) is one of the best schemes for setting up a micro enterprise in India. You can get 15% to 35% subsidy on your project cost — meaning the government gives you back a big chunk of your loan as a grant.

This guide covers everything — eligibility, subsidy rates, how to apply online, documents needed, and the full process from application to bank sanction.

What is PMEGP?

PMEGP is a central government credit-linked subsidy scheme for setting up new micro enterprises. It is managed by the Khadi and Village Industries Commission (KVIC) under the Ministry of MSME.

Key highlights:

• Manufacturing sector — project cost up to ₹50 lakh
• Service/business sector — project cost up to ₹20 lakh
• Subsidy (margin money) — 15% to 35% of the project cost given as government grant
• No income ceiling — anyone eligible can apply
• The subsidy is routed through the bank and kept in a fixed deposit for 3 years

PMEGP replaced the earlier PMRY (Prime Minister Rozgar Yojana) and REGP schemes.

PMEGP Subsidy Rates

The subsidy depends on two factors: your social category and whether your unit is in an urban or rural area.

How the funding works:

Example: If your project cost is ₹25 lakh and you are a woman starting a unit in a rural area, you get ₹8.75 lakh (35%) as subsidy. You only pay ₹1.25 lakh (5%) from your pocket. The bank finances the remaining ₹15 lakh.

Who Can Apply? — Eligibility Criteria

• Age: 18 years or above
• Education:
  • No minimum for projects up to ₹10 lakh
  • 8th pass (Class VIII) required for projects above ₹10 lakh (both manufacturing and service)
• New units only — existing units or units already availing government subsidy are not eligible
• No income ceiling — applies to all income groups
• Institutions registered under Societies Registration Act, Production Co-operative Societies, and Charitable Trusts can also apply
• Self Help Groups (SHGs) including those under NRLM/DAY-NRLM are eligible (but should not be availing subsidy under any other scheme)
• Only one person from a family can avail the subsidy

Who cannot apply:

• Existing units or units that have already received government subsidy
• Units set up under other government subsidy schemes like CMEGP (state scheme)

Documents Required for PMEGP Application

Keep these documents ready before you start the online application:

1. Aadhaar Card (mandatory — application is Aadhaar-linked)
2. PAN Card
3. Caste Certificate (for SC/ST/OBC applicants)
4. Special Category Certificate — Ex-serviceman / PwD / Minority certificate if applicable
5. Educational Qualification Certificate (8th pass or above for projects > ₹10 lakh)
6. Passport-size Photographs
7. EDP (Entrepreneurship Development Programme) Training Certificate — if already completed (can also be done after selection)
8. Project Report / Detailed Project Report (DPR) — describing your proposed business, costs, revenue projections
9. Quotations for machinery and equipment (for capital expenditure)
10. Rural Area Certificate — from Gram Panchayat / Tehsildar (if claiming rural subsidy rate)
11. Address proof for proposed unit location
12. Bank account details and IFSC code

Project Report for PMEGP

The Project Report is the most important document. It should cover:

• Nature of activity — what you will manufacture or which service you will provide
• Total project cost — split into capital expenditure and working capital
• Machinery and equipment details with cost estimates / quotations
• Raw material requirements
• Proposed employment — how many people the unit will employ
• Revenue and profitability projections
• Location details

Tip: You can get help preparing the project report from your local DIC (District Industries Centre), KVIC/KVIB office, or hire a CA/consultant. Many KVIC training institutes also help with project reports.

How to Apply for PMEGP Online — Step by Step

Step 1: Go to the PMEGP Portal

Visit: https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp

Step 2: Choose Application Type

• Individual Applicant — for single person
• Non-Individual — for SHGs, Trusts, Institutions, Co-operative Societies

Step 3: Fill the Online Form

Enter the following details:

1. Aadhaar Card Number (or EID if Aadhaar not received yet)
2. Name (as per Aadhaar)
3. Sponsoring Agency — choose from KVIC, KVIB, or DIC
4. State, District, and Sponsoring Office
5. Gender, Date of Birth, Social Category
6. Educational Qualification
7. Communication Address and Unit Location
8. Type of Activity — Manufacturing or Service
9. Industry / Activity Name and Product Description
10. EDP Training details (if completed)
11. Project Cost — Capital Expenditure + Working Capital = Total
12. Bank details — IFSC code and branch of your preferred bank
13. Whether you want CGTMSE coverage (Credit Guarantee — recommended, as it removes need for collateral)

Step 4: Upload Documents

Upload scanned copies of your Aadhaar, photo, caste certificate, project report, and other required documents.

Step 5: Submit and Note Application ID

After submission, you will get an Application ID. Save it — you can track your application status with this ID on the same portal.

Step 6: Application Screening

Your application goes through a screening process:

1. Sponsoring Agency (KVIC / KVIB / DIC) reviews and shortlists applications
2. A District-level Task Force Committee (DLTFC) interviews shortlisted candidates
3. Recommended applications are forwarded to the bank for loan sanction

Step 7: EDP Training

Selected candidates must complete EDP (Entrepreneurship Development Programme) training — usually 10-15 days. This is provided free of cost through KVIC/KVIB-recognized institutions.

Step 8: Bank Sanction & Disbursal

• The bank processes the loan application
• After sanction, loan amount is disbursed
• Subsidy (margin money) is released by KVIC to the bank
• The bank keeps subsidy in a Term Deposit Receipt (TDR) for 3 years
• After 3 years, the TDR is adjusted against the loan outstanding

Role of KVIC, KVIB, and DIC

You can choose any one of these three as your sponsoring agency while applying.

Second Loan Under PMEGP (2nd Dose)

If you already have a running PMEGP unit and want to expand/upgrade, you can apply for a second loan:

• Eligibility: Existing PMEGP / MUDRA / PMRY units that have repaid their first loan or are regular in repayments
• Project cost: Up to ₹1 crore (manufacturing) and ₹25 lakh (service) — only the top-up/expansion portion gets subsidy
• Subsidy on 2nd loan: 15% (Urban) and 20% (Rural) — for all categories
• Must show that the existing unit is running successfully
• Apply through the same PMEGP portal

Margin Money and Your Contribution

Margin money = government subsidy. It is not a cash payout to you — it goes directly to the bank and is locked in a fixed deposit for 3 years.

Your own contribution (beneficiary contribution):

• General category: 10% (urban) or 5% (rural)
• Special category: 5% (both urban and rural)

This means you need very little money from your pocket to start the business. The rest comes from the bank loan and government subsidy.

Important Tips for PMEGP Applicants

1. Apply early in the financial year — funds are allocated annually and may get exhausted
2. Prepare a realistic project report — inflated costs lead to rejection
3. Choose the right activity — check the KVIC list of approved village industries and activities
4. Complete EDP training promptly — delays here delay your loan
5. Keep documents ready — especially caste certificate and rural area proof
6. CGTMSE coverage — opt for it to avoid collateral requirement on loans up to ₹5 lakh (sometimes more)
7. Track your application regularly on the portal using your Application ID
8. Land/premises — you don't need to own land; rented premises are accepted

Frequently Asked Questions

Is PMEGP a loan or a grant?

PMEGP is a credit-linked subsidy. You take a bank loan, and the government gives a portion (15-35%) back as a subsidy (grant). You repay only the bank loan portion.

Can I apply for PMEGP if I already have a Mudra loan?

If your Mudra unit is running successfully and you want to upgrade it, you may be eligible for the 2nd dose of PMEGP. For a completely new unit, you can apply for PMEGP separately. Check eligibility with your local DIC/KVIC office.

How long does the PMEGP process take?

Typically 3 to 6 months from application to bank disbursal, depending on the screening and bank processing speed.

Can I get PMEGP for an existing business?

No. PMEGP is only for new enterprises. However, the 2nd dose provision allows existing PMEGP/PMRY beneficiaries to expand.

What happens if my application is rejected?

You can re-apply in the next financial year. Check with your sponsoring agency for the reason of rejection and address it.

Related Guides

• How to Apply for Mudra Loan — for loans up to ₹20 lakh without collateral
• Udyam MSME Registration Online — register your business as an MSME for additional benefits

Official Links

• PMEGP Online Application Portal: https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp
• KVIC Official Website: https://www.kvic.gov.in
• Ministry of MSME: https://msme.gov.in