PMEGP Loan Sanction Process Step by Step Detailed Guideline

PMEGP loan scheme is in favour of the youth. You can check details for the PMEGP Loan Sanction Process here. PMEGP has been started by the government of India. PMEGP stands for Prime Minister Employment Generation Programme. Under this scheme, the government offers subsidies to Indian entrepreneurs on the latest business projects depending on different criteria.

The maximum amount of loan amount that is offered to manufacturing units is Rs 25 Lakh whereas to the business and service sector is Rs 10 Lakh. You also have the option to apply for a second loan that amounts to a maximum of 1 crore for upgrading or expanding your existing business. The government subsidy that you can avail of for the second loan is 15 to 25% of the project cost.

PMEGP Loan Sanction Process

You can get to know the PMEGP loan sanction process by following the prescribed criteria only as there is no shortcut. You need to apply for the loan online fill out all the required application forms and submit documents. Then you receive a call for confirmation. Later after you complete your EDP training and receive its certificate. You submit the share of your cash and the EDP certificate to the bank.

PMEGP Loan Details

The details of the PMEGP loan are the following.

• The rate of interest that the bank offers to the beneficiary of the PMEGP loan is 11 to 12% per annum.
• The maximum project cost is Rs 25 Lakh for manufacturing units. The business and service sector can avail of loans up to Rs 10 Lakh.
• The subsidy that an applicant can get on a PMEGP loan is between 15% to 35% depending on the set criteria.
• The age of the applicant must be at least 18 years and the education should be 8^th Pass.
• The eligible entities for this loan are the business houses, service sector and manufacturing units. Co-operative societies, institutions and self-help groups can also avail this opportunity.
• The duration of the loan process is 60 days minimum.

PMEGP Subsidy Sanction

There are different categories for PMEGP subsidy. Read them below.

The general and special categories get different rates of interest and subsidies for PMEGP loans. The beneficiary’s share of the total project cost is 10% for the general category. The subsidy rate for entrepreneurs from rural areas is 25% and from urban areas is 15%.

For special categories, be it minorities, SC, BC, ST, OBC, NER, physically challenged etc have the beneficiary share as 55 and the subsidy that the rural ones enjoy is 35% and the urban ones get 25% subsidy.

The project cost that remains is provided by the bank or financial institution as a term loan or working capital. The government subsidy that one can get in case of a second loan is 15 to 20%.

Interest Rate For PMEGP Loan Sanction Process

The interest rate for the PMEGP scheme ranges differently for different eligibility. It is 11 to 12% per annum usually. The repayment tenure is 3 to 7 years and you can enjoy the moratorium period of 6 months.

The interest rate varies from bank to bank and it also depends upon the profile of the beneficiary, business type stability and project cost as well.

What are the Documents needed for the PMEGP Loan?

Here are the documents that you would need to get your PMEGP Loan sanctioned.

• Aadhaar card
• PAN card
• Category and Caste certificate
• PMEGP Project report
• Special category certificate
• Business area certificate- Rural or Urban
• Skill Development/ Education Qualification/ Entrepreneur Development Program Training Certificate
• Authorisation letter, registration certificate and caste certificate when asked.

How to Apply for a PMEGP Loan?

The loan application process starts with the divisional or state directors of KVIC along with the directors of industries of different states and the Khadi and Village Industries Board releases the local ads via electronic media and newspapers so that the applicants can see the advertisements and approach their project proposals. The beneficiaries who are looking to start a new business or service hub get this opportunity and apply for a PMEGP loan after seeing the advertisement.

You can use the process mentioned below to apply for a PMEGP loan.

• You need to visit the official website of KVIC or my.msme.gov.in to apply for a PMEGP Loan Application.
• Click on PMEGP which is the Prime Minister Employment Generation Programme tab on the PMEGP Online Portal.
• Now you have to click on the loan application form for individuals and you will see the application form on the screen of your device.
• The online portal of PMEGP will show you two different options. One is for individuals and the other is for institutional applicants.
• You have to fill out the form that is for you. It requires all important details to be filled by you. It includes your name, type of business, sponsoring agency details, education details, bank account details and many more.
• Once you fill in your details. Click on the save applicant data option.
• Now you need to submit your documents that are proof that your information is true.
• Submit the documents. When you submit them, submit the complete application form.
• You will receive an ID and password on your registered mobile number for future use.

PMEGP Loan Sanction Status

If you are waiting to check the loan application status you can do it very easily and in a gist of time. Follow these steps.

You can check the Pradhan Mantri Employment Generation Programme loan status through the PMEGP E-Tracking System.

• Go to the PMEGP online portal and visit kviconline.gov.in to track the loan status.
• Click on the login using the ID and password you received after submitting the loan application form on your mobile number.
• You will see a new page that opens in front of you. Add your login ID and password.
• Then click on the login button.
• You can check the status of PMEGP Loan Sanction by clicking on view status.

PMEGP Loan Sanction Guidelines

The PMEGP loan can be sanctioned from 27 public sector banks, cooperative banks, all regional Rural banks that are approved by the State Level Task Force Committee headed by the Principal Secretary( Industries/Commissioner), Private sector commercial banks that are approved by the state-level task and force committee being headed by Principal Secretary (Industries/ Commissioner) and SIDBI that is Small Industries Development Bank Of India.

The identification of applicants is done at the district level by DIC KVIB or banks.

The banks are ready to provide up to 90% of the total project cost and the remaining ones are to be arranged by the beneficiary of the general category.

The special category ones get 95% share from the bank and the remaining 5% is their duty to arrange. The bank then disburses the complete amount suitable for the project of the beneficiary directly into the bank account given by the applicant.

The bank is ready to finance the capital expenditure in the form of term loans and working capital as cash credit. Thus the loan includes both capital expenditure and working capital.

The credit that the bank provides ranges between 60 to 75% of the project cost. 15 to 35% of marginal money subsidy is deducted too. 10% contribution of the applicant for the general category and 5% of the special category is also under the guideline of PMEGP.

The working capital needs to be utilized in a manner that at least once it touches 100% cash credit limit within the lock-in 3 years. It should not go below 75% of the loan amount sanctioned by the bank. If it doesn’t meet the specified limit, the bank recovers the proportionate amount of subsidy and refunds the same to the KVIC when the lock-in period ends.

The PMEGP loan charges the normal rate of interest from the beneficiary.

The repayment tenure lies between 3 to 7 years and the moratorium period is of 6 months.

The village industry deals in coir-based projects and is located In rural areas producing goods or rendering services without or with the use of power to get fixed capital investment per head of the full-time worker. The full-time capital expenditure on furniture and machinery doesn’t increase by more than a lakh in plain areas and 1.5 lakh in hilly.

The project proposal is invited by the beneficiary at the district, state and national level by DIC, KVIB and KVIC through advertisement in newspapers, electronic media and radio.

The Panchayati Raj System also advertises the PMEGP scheme.

Online application is accepted for the PMEGP loan scheme and therefore you cannot apply offline for this scheme.

Applicants get the user ID and password using which they track the PMEGP loan sanction status.

Your Adhaar number is required and if you don’t have it, your PAN Card is functional because it has details of your bank account number.

The PMEGP Loan Sanction Process takes 48 hours to 3 working days to receive the application. The officials of KVIC, KVIB and DIC interact personally with the beneficiary either face to face or telephonically. This lets the applicant confirm the receipt of the loan application form by the PMEGP department.

The bank checks the PMEGP loan carefully and decides whether to provide credit to the applicant or not.

Banks will follow the guidelines of the RBI and will not insist on any security for the business project involving the amount of Rs 10 Lakh.

The financial institution will have to either accept or reject the loan application within 30 days.

The applicants need not wait for the loan to be sanctioned. Once they submit the form, they can begin with the EDP training in the meantime after consulting the KVIC state office about the payment thing of EDP.

The applicant needs to keep his share ready and a copy of the EDP training certificate to be submitted to the bank when the loan gets sanctioned. The period to submit these two documents is 10 days.

The bank will release the instalment the very first instalment of the PMEGP loan either in full or in part. It will also submit the subsidy claim online on the e-portal of KVIC.

The department will send the subsidy claim amount after validation by the KVIC to the concerned bank within 24 hours of validation.

Once the subsidy is sent to the bank, it keeps it as a term deposit for 3 years in the name of the beneficiary or the institution. No interest is charged on the loan that is disbursed and no interest is paid by the applicant as well.

If the advance received by the bank goes bad in the 3 years lock-in period, the amount is returned to the KVIC department with interest.

You can get the subsidy only once and no other help is available to increase the credit limit or expansion of the business project.

The projects that are jointly financed under 2 different sources may not be eligible for subsidy assistance.

Frequently Asked Questions on The PMEGP Loan Sanction Process