Government loan schemes
PMEGP Loan: Complete Guide to Subsidy, Eligibility and Application
Quick answer
PMEGP (Prime Minister's Employment Generation Programme) is a government scheme that gives a subsidy of 15% to 35% of the project cost to people setting up a new business. Projects can cost up to ₹50 lakh in manufacturing and ₹20 lakh in services. You put in 5% to 10%, a bank lends the rest, and you apply online on the KVIC PMEGP portal.
On this page
- PMEGP at a glance
- How much PMEGP subsidy you get
- Worked example: who pays what
- How the subsidy is paid: the 3-year rule
- Who can apply for a PMEGP loan
- Documents required for PMEGP
- How to apply for a PMEGP loan, step by step
- EDP training
- Second loan for upgradation
- Collateral and interest rate
- Why PMEGP applications get rejected
- PMEGP vs Mudra: which should you choose?
- Frequently asked questions
PMEGP at a glance
- Full name
- Prime Minister's Employment Generation Programme
- Run by
- Ministry of MSME, with KVIC as the national nodal agency
- For
- New micro enterprises only, in manufacturing, service and business activities
- Maximum project cost
- ₹50 lakh (manufacturing) · ₹20 lakh (service/business)
- Subsidy (margin money)
- 15% to 35% of project cost, by category and area
- Your contribution
- 10% (general) · 5% (special categories)
- Bank loan
- The balance, as a term loan plus working capital
- Repayment
- 3 to 7 years after an initial moratorium
- Where to apply
- Online only, on the KVIC PMEGP e-portal (kviconline.gov.in)
- Recent activity
- ₹289 crore of subsidy released for 3,366 new projects in September 2026
Scheme details as of October 2026. Sources are listed at the end.
How much PMEGP subsidy you get
Your subsidy depends on two things: your category and whether the unit is in a rural or urban area. Areas under a panchayat count as rural; areas under a municipal body count as urban.
| Your category | Urban | Rural |
|---|---|---|
| General You put in 10% | 15% | 25% |
| Special You put in 5% | 25% | 35% |
Subsidy as a share of project cost, for new units under the PMEGP guidelines for 2021-22 to 2025-26.
Special categories include SC, ST, OBC, minorities, women, ex-servicemen, transgender persons, persons with disabilities, and applicants from the North-East, hill and border areas and aspirational districts.
Land isn't counted in the project cost. Costs above the ₹50 lakh or ₹20 lakh limits can still be funded by the bank, but no subsidy is paid on the extra.
Subsidy at the maximum project cost
| Project | General, urban | Special, rural |
|---|---|---|
| Manufacturing, ₹50 lakh | ₹7.5 lakh | ₹17.5 lakh |
| Service, ₹20 lakh | ₹3 lakh | ₹7 lakh |
Worked example: who pays what
A woman (special category) sets up a ₹10 lakh flour mill in a village (rural):
- Your contribution: ₹50,000 5%
- Subsidy, held against the loan: ₹3.5 lakh 35%
- Loan you actually repay: ₹6 lakh 60%
The bank lends ₹9.5 lakh (95% of the project). ₹3.5 lakh of that is matched by the subsidy, so you repay and pay interest on about ₹6 lakh. The subsidy clears the rest once the 3-year condition below is met.
How the subsidy is paid: the 3-year rule
The subsidy doesn't come to you as cash. It goes to your bank and is held in a term deposit (TDR) in your loan account for 3 years.
- No interest is paid on that deposit, and the bank charges no interest on the matching part of your loan.
- After 3 years, if the unit is running and meets the scheme's conditions, the subsidy is adjusted against your loan. Agencies engaged by KVIC physically verify the unit first.
- If the unit closes, isn't set up as approved, or spends less than sanctioned, part or all of the subsidy can be taken back.
Who can apply for a PMEGP loan
- Any individual above 18 years, with no income limit
- Class VIII pass for projects above ₹10 lakh in manufacturing or above ₹5 lakh in service/business
- Only new projects; existing units aren't eligible (see the second loan instead)
- Only one person per family (you and your spouse count as one)
- Self-help groups, registered societies, production cooperatives and charitable trusts can also apply, provided they haven't taken benefits under another scheme
Documents required for PMEGP
-
Aadhaar (mandatory; verified online) and PAN
-
Passport-size photograph
-
Project report
Project cost, machinery, working capital, sales projections and repayment plan. It's the most important document in your application.
-
Education certificate
Class VIII or above, if your project needs it.
-
Caste or special category certificate, if applicable
-
Rural area certificate, for units in rural areas
-
Quotations for machinery and equipment
-
Proof of premises: rent or lease agreement, or ownership papers
-
EDP training certificate
Needed before the loan is released, not at the application stage.
How to apply for a PMEGP loan, step by step
Applications are online only; paper forms aren't accepted.
-
Prepare your project report (you)
Price the machinery, premises set-up and working capital, and set realistic sales targets. Don't inflate the cost to get more subsidy; that's a common reason for rejection.
-
Register on the PMEGP e-portal (you)
Go to kviconline.gov.in › PMEGP e-portal and open the application form for a new unit. Your login details are sent to your registered mobile number.
-
Fill in the form and upload documents (you)
Enter your details and Aadhaar, pick your implementing agency (KVIC, state KVIB or District Industries Centre) and your preferred bank branch, and upload your photo, project report and certificates.
-
Submit and note your Application ID (you)
The portal shows a self-assessed score, then gives you an Application ID. Download the acknowledgement.
-
Agency scrutiny (agency)
The implementing agency checks your application, may call you for an interview, and forwards it to the bank.
-
Bank appraisal and sanction (bank)
The bank assesses the project, may visit the site and sanctions the loan.
-
Complete EDP training (you)
Mandatory before the first loan instalment is released. See below.
-
Loan release and subsidy claim (bank)
You deposit your own contribution, the bank releases the loan, and it claims the subsidy, which is held as a TDR.
-
Set up and run the unit (you)
Buy the approved machinery, start production or service, and repay EMIs on time. After 3 years and a physical check, the subsidy is adjusted against your loan.
EDP training
Every PMEGP beneficiary must complete Entrepreneurship Development Programme (EDP) training after the loan is sanctioned and before the first instalment is released. It covers running a business, accounts, marketing and the scheme rules.
- Duration depends on project size: shorter for small projects, around 10 days for larger ones. Online EDP is available.
- If you've already completed a qualifying EDP, skill development or vocational course (at least 10 days offline or 60 hours online), you may be exempt.
- Your implementing agency tells you the dates; the training is free.
Second loan for upgradation
Already running a unit set up under PMEGP, REGP or Mudra? You can get a second, subsidised loan to expand or upgrade it, if the first loan was repaid on time and the unit is doing well.
| Manufacturing | Service/business | |
|---|---|---|
| Maximum project cost | ₹1 crore | ₹25 lakh |
| Subsidy | 15% (20% NER/hill) | 15% (20% NER/hill) |
| Maximum subsidy | ₹15 lakh (₹20 lakh NER/hill) | ₹3.75 lakh (₹5 lakh NER/hill) |
| Your contribution | 10% | 10% |
For the second loan, the subsidy is adjusted after a 3-year lock-in.
Collateral and interest rate
Under RBI rules, banks shouldn't ask for collateral on micro and small enterprise loans up to ₹10 lakh. For larger PMEGP loans, banks commonly cover the loan under CGTMSE instead of asking for property. Interest is at the bank's normal MSME rate, usually linked to its repo-linked benchmark (see current bank benchmarks). You pay no interest on the part of the loan matched by your subsidy.
Why PMEGP applications get rejected
- Weak or copied project report Banks reject reports with unrealistic sales or generic numbers. Use real quotations and local prices.
- Inflated project cost The scheme specifically bars inflating costs to raise the subsidy, and banks cut them back.
- Not a new unit Existing businesses don't qualify for the first loan.
- Poor credit record Defaults or a low CIBIL score lead banks to decline even subsidised loans.
- Branch outside your area Choose a branch near the unit; branches lend within their service area.
- Missing certificates Without a caste, special category or rural certificate you get the lower subsidy, or the file stalls.
- Activity on the negative list Check the list before you spend on a project report.
PMEGP vs Mudra: which should you choose?
| PMEGP | Mudra | |
|---|---|---|
| Subsidy | 15–35% of project cost | None |
| Who | New units only | New and existing |
| Maximum | ₹50 lakh / ₹20 lakh project | ₹20 lakh loan |
| Process | Longer: agency, bank, EDP | Simpler: bank only |
| Best if | Starting a unit with machinery and you can wait a few weeks | You need money faster, or already run a business |
Not sure PMEGP fits your plan?
Tell us about the unit you want to set up and a Kredway loan advisor calls you back to talk through your subsidy category, the project report and which bank branch to approach. We advise; we don't lend.
Frequently asked questions
Is PMEGP still available in 2026?
Yes. KVIC was still releasing subsidy to new PMEGP projects in September 2026. Check the PMEGP e-portal for the current guidelines before you apply.
How much subsidy can I get under PMEGP?
15% (general, urban), 25% (general, rural or special, urban) or 35% (special, rural) of the project cost. At the ₹50 lakh manufacturing limit, that's ₹7.5 lakh to ₹17.5 lakh.
Is the subsidy paid to me in cash?
No. It's held in a deposit against your loan for 3 years and then adjusted against the loan, if the unit is running as approved.
Can an existing business apply for PMEGP?
Not for the first loan, which is only for new units. Units already set up under PMEGP, REGP or Mudra can apply for the second loan for upgradation.
Is a trading business eligible?
Business and service activities are covered, but projects with no capital expenditure aren't. A pure trading business with no equipment usually won't qualify.
Do I need collateral for a PMEGP loan?
Banks shouldn't ask for collateral on micro and small enterprise loans up to ₹10 lakh. Larger loans are usually covered under CGTMSE.
What happens if my unit closes within 3 years?
The subsidy can be recovered, and you remain liable to repay the full bank loan.
PMEGP loan kaise milta hai?
kviconline.gov.in par PMEGP e-portal mein naye unit ka form bharein, Aadhaar, project report aur certificates upload karein, aur agency (KVIC, KVIB ya DIC) aur bank branch chunein. Agency jaanch ke baad file bank ko bhejti hai. Bank sanction karta hai, phir EDP training ke baad loan milta hai.
PMEGP mein kitni subsidy milti hai?
General category ko shahar mein 15% aur gaon mein 25%, aur special category (SC, ST, OBC, mahilayein aadi) ko shahar mein 25% aur gaon mein 35% subsidy milti hai, project cost par.
Sources
- Bank of Maharashtra: PMEGP (scheme guidelines summary)
- Business Standard: PMEGP extended to FY26 with revised limits
- HP Khadi & Village Industries Board: PMEGP (TDR and EDP)
- Delhi KVIB: Revised PMEGP guidelines
- DIC Puducherry: PMEGP
- Indian Masterminds: KVIC releases ₹289 crore PMEGP subsidy (September 2026)
- KVIC: PMEGP e-portal