PMEGP Loan Scheme: Eligibility, Subsidy and How to Apply
Reviewed by: WeCredit Research Team
PMEGP (Prime Minister’s Employment Generation Programme) helps you set up a new micro enterprise with a bank loan plus a government subsidy of 15% to 35% of the project cost. Projects can cost up to Rs. 50 lakh in manufacturing or Rs. 20 lakh in the service sector.
WeCredit does not sanction government scheme loans. PMEGP applications go through the official PMEGP e-portal and banks decide the loan. Confirm current details on the official source before you apply. This guide is part of our government loan schemes hub.
PMEGP at a Glance
| Item | Detail |
|---|---|
| Who it is for | Adults above 18 starting a new non-farm micro enterprise (individuals) |
| Maximum project cost | Rs. 50 lakh (manufacturing), Rs. 20 lakh (service) |
| Subsidy, general category | 25% of project cost (rural), 15% (urban) |
| Subsidy, special categories | 35% of project cost (rural), 25% (urban) |
| Your contribution | 10% of project cost (general), 5% (special categories) |
| Security | Collateral-free loans up to Rs. 10 lakh are mentioned in the official FAQ; CGTMSE cover is available |
| Where to apply | PMEGP e-portal of KVIC (kviconline.gov.in) |
Is PMEGP Still Active in 2026?
The Government approved PMEGP for 2021-22 to 2025-26 with an outlay of Rs. 13,554.42 crore. A parliamentary committee release on the Industry department’s report notes an allocation of Rs. 4,500 crore for PMEGP in the 2026-27 budget estimate, up from Rs. 2,954 crore the year before, so the scheme is being funded. Check the PMEGP e-portal for the current application status and any extension of the approved period before you spend time on a project report.
Who Can Apply
- Any adult above 18 years. Only individual entrepreneurs are covered.
- The unit must be new. The exception is a second loan for units already financed under REGP, PMEGP or MUDRA.
- The activity must be in the non-farm sector, in manufacturing or services.
Special categories get the higher subsidy and lower own contribution. These are SC, ST, OBC, minorities, women, ex-servicemen, persons with disability, transgender applicants, and applicants from north-eastern, hill, border and aspirational districts.
Subsidy and Own Contribution
| Category | Rural area | Urban area | Your contribution |
|---|---|---|---|
| General | 25% | 15% | 10% |
| Special categories | 35% | 25% | 5% |
The subsidy is a percentage of project cost, not of the loan. Example for illustration only: a general-category rural service project costing Rs. 10 lakh gets a 25% subsidy of Rs. 2.5 lakh, and you contribute 10%, which is Rs. 1 lakh. The bank finances the balance after its own appraisal. The subsidy is settled through the bank, so confirm with your branch how it is adjusted against your loan.
Activities PMEGP Does Not Cover
The official FAQ lists a negative list that includes meat processing or serving, alcohol and tobacco production, plastic bags that do not meet norms, cultivation of crops such as tea, coffee, rubber, sericulture, horticulture and floriculture, and standard animal husbandry. Exceptions include non-vegetarian food service at establishments, value-added agricultural products, dairy, poultry, aquaculture and beekeeping. Read the full guidelines on the portal for your activity before you prepare a project report.
Training Requirement
Entrepreneurship Development Programme (EDP) training is part of the scheme. For projects above Rs. 5 lakh it is 10 working days. For projects up to Rs. 5 lakh it is 5 working days. Projects up to Rs. 2 lakh do not need the training.
Documents You Will Need
The exact checklist is shown on the PMEGP e-portal and by your bank, and it can change. Keep ready your identity and address proof, details of the proposed unit, a project report with cost estimates, and proof of category if you claim the special-category subsidy. Treat this as a starting list, not a final one.
How to Apply, Step by Step
- Check that your activity is not on the negative list and that your unit is new.
- Prepare a project report with cost, sources of funds and expected income.
- Register and submit your application on the official PMEGP e-portal. The official release says the process from application to sanction and release of funds is online.
- Complete EDP training where it applies to your project size.
- Your application is processed through the agency and the bank. The bank appraises it and decides on the loan.
- On sanction, confirm the interest rate, fees and repayment terms in writing before you accept.
Application Status and Rejection
You can follow your application inside your PMEGP e-portal login. A Parliamentary Standing Committee report has flagged bank rejection of PMEGP applications as a concern, so a complete project report and a realistic repayment plan matter. Banks look at repayment capacity, so the same checks in our guide on why business loans get rejected apply here too.
PMEGP vs Other Government Loan Routes
| Scheme | Best for | Subsidy |
|---|---|---|
| PMEGP | New micro units in manufacturing or services | Yes, 15% to 35% of project cost |
| MUDRA | Non-farm micro businesses, including existing ones, up to Rs. 20 lakh | No. It is a loan, not a subsidy |
| CGTMSE-backed credit | Collateral-light credit for eligible small enterprises | No. It is a guarantee to the lender |
For the wider picture, read our government business loans eligibility guide and the MSME and SME online apply guide. Women founders can also see our women entrepreneur finance checklist. If PMEGP does not fit, compare a business loan for new owners.
Common Mistakes
- Applying for an existing business. PMEGP is for new units, with a narrow exception for second loans.
- Choosing a negative-list activity. Check your activity against the guidelines first.
- Treating the subsidy as free money. It reduces the loan burden, but you still repay the bank loan and contribute 5% or 10% yourself.
- Skipping training. EDP training is part of the process for projects above Rs. 2 lakh.
- Paying an agent. Applications are made on the official portal. Use only the official website and be careful with anyone who asks for a fee to arrange a subsidy.
Official Sources
- PMEGP e-portal (KVIC)
- PMEGP official FAQ
- PIB: PMEGP continuation 2021-22 to 2025-26
- PIB: PMEGP subsidy rates and project limits
- PIB: Standing Committee on Industry report release (2026-27 allocation)
Frequently Asked Questions
What is the maximum project cost under PMEGP?
Rs. 50 lakh for manufacturing and Rs. 20 lakh for the service sector.
How much subsidy does PMEGP give?
General category gets 25% in rural areas and 15% in urban areas. Special categories get 35% in rural areas and 25% in urban areas. The percentage applies to project cost.
How much do I have to invest myself?
10% of project cost for the general category and 5% for special categories.
Can an existing business apply?
Generally no. Only new units qualify, apart from second loans to units already financed under REGP, PMEGP or MUDRA.
Is there an age limit or education requirement?
The official FAQ says any adult above 18 years is eligible. Check the current guidelines on the portal for any other conditions.
Do I need collateral?
The official FAQ mentions collateral-free loans up to Rs. 10 lakh and CGTMSE cover. Banks still appraise each project, so ask your branch what security applies to your loan.
Does WeCredit give PMEGP loans?
No. WeCredit does not sanction government scheme loans. Apply on the official PMEGP e-portal. If you need a regular business loan, you can compare options on WeCredit.
Scheme rules, amounts and portals can change. Confirm current details on the official PMEGP e-portal before you apply.
