How to Get Government Grants (PMEGP Scheme for Startups)?
Has the urge to launch your own venture taken hold of you? Are you looking to start your own gig and are looking for financial assistance? Look no further for assistance to give up a leg up to your seed capital. The Government of India has stepped in to ease this path through the Prime Minister’s Employment Generation Programme (PMEGP).
Understanding PMEGP: A Gateway to Entrepreneurial Success
PMEGP, initiated by the Government of India, has undergone significant enhancements.
Recently, the maximum project cost was increased to Rs. 20 lakhs for service units and Rs. 50 lakhs for manufacturing units. The substantial rise in capital limits now paves the way for emerging business minds to explore uncharted entrepreneurial territories.
Under PMEGP, business owners are required to invest just 5%-10% of the project cost.
The government chips in with a subsidy of 15%-35%, based on various criteria.
In addition to government help, banks have various lending options such as term financing and operational credit or blended finance solutions tailored for both initial setup costs and the everyday money matters of a project.
Financial Aspects: Subsidies, Loans, and Interest Rates
A noteworthy aspect of the PMEGP is its financial flexibility. For the general category of beneficiaries, the bank sanctions 90% of the project cost, which rises to 95% for special categories.
The credit offered by banks ranges between 60-75% of the total project cost, with the remaining sanctioned component provided as a margin money subsidy under the PMEGP scheme.
The interest rates under the PMEGP scheme vary from bank to bank and depend on factors like the applicant’s profile, creditworthiness, and the total project cost.
Prominent banks like the State Bank of India, Bank of Baroda, Canara Bank, and Bank of India, along with other private and public sector banks, offer loans under this scheme.
Repayment Tenure and Eligibility Criteria
The PMEGP scheme offers a flexible repayment schedule, ranging from 3 to 7 years, following an initial moratorium period defined by the bank.
Individuals aspiring to secure this financial support must have reached the age of majority, 18 years, and successfully completed at least an elementary eighth-grade education.
Importantly, this assistance is available only for new projects, and there is no income ceiling for setting up these projects. Additionally, beneficiaries must undergo mandatory Entrepreneurship Development Programme (EDP) training.
Entrepreneurs having projects costing less than or equal to Rs 5 lakhs have to undergo a five-day training programme conducted by the Ministry of Micro, Small and Medium Enterprises, while those with projects costing more than Rs 5 lakhs have to undergo a 10-day programme.
Eligibility
The PMEGP scheme can be available not only by individual entrepreneurs but also other entities, including MSMEs, Self-help Groups, Charitable Trusts, Societies registered under the Societies Registration Act, and Production Co-operative Societies.
The PMEGP scheme stands as a testament to the government's commitment to fostering entrepreneurship in India.
The PMEGP serves as a crucial lifeline, offering cash aid, price reductions, and learning opportunities for budding business owners eager to embark on their own ventures with the backing of government initiatives.
With the recent extension of PMEGP for five years, from 2021-22 to 2025-26, the horizon looks promising for aspiring entrepreneurs to turn their business dreams into reality.
Step-by-Step Guide to Applying for Government Grants
Starting your business with government assistance is possible, but you must follow specific steps. Here’s how you can do it:
Step 1: Find the Right Grant for Your Business
First, check which government scheme or grant matches your startup idea. For example, if you are starting a mobile app for farmers, look for schemes in agriculture or technology. Visit trusted websites, such as Startup India or MSME.
Step 2: Register Your Startup
To apply for most grants, your business must be registered. You can register as a Private Limited Company, LLP (Limited Liability Partnership), or Partnership Firm. Then, get DPIIT recognition from the Startup India portal. DPIIT stands for Department for Promotion of Industry and Internal Trade. It certifies that your business is a startup.
Step 3: Make a Simple Business Plan
Write a business plan that explains:
- What is your product or service?
- Why do people need it?
- How will you use the money?
- What goals do you want to achieve?
Example: If you are starting an eco-friendly packaging business, mention how the funds will help buy machines or train staff.
Step 4: Fill Out the Application
Go to the official grant portal (like Startup India or BIRAC) and fill out the form. Upload your business plan, ID proof, and other documents they ask for.
Step 5: Wait for Response and Follow Rules
After applying, track your application status online. If selected, follow all rules. For example, you may need to attend training or give regular updates on your progress.
By following these steps carefully, your startup can get the financial support it needs without taking a loan.
Top Government Grants & Schemes for Startups in India
Here are some helpful government schemes that give money support (grants or loans) to startups in India:
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Startup India Seed Fund Scheme (SISFS): This scheme gives up to ₹50 Lakh to new startups for developing their product and entering the market. You must be recognised by DPIIT and have a good business idea.
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MSME Innovation Scheme: This is for Micro, Small, and Medium Enterprises working on new products or improving existing ones. Grants go up to ₹1 Crore.
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Atal Innovation Mission (AIM): This helps startups that are working on innovative (new and creative) ideas. The scheme supports both schools and businesses.
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Biotechnology Ignition Grant (BIG): For biotech startups and researchers. If you’re making new products in health or science, you can get up to ₹50 Lakh.
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Pradhan Mantri Mudra Yojana (PMMY): This scheme gives small loans (up to ₹10 Lakh) to small businesses. No need for heavy paperwork.
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TIDE 2.0: Supports tech startups in AI, cybersecurity, and IoT (Internet of Things). You can get up to ₹7 Lakh through government-approved incubators.
These schemes make it easier for new businesses to grow without the pressure of heavy loans.
Government Grants Are a Smart Way to Start
Starting a business in India doesn’t have to feel overwhelming, especially when the government offers so many helpful schemes and grants. These financial aids can give your startup the push it needs without worrying about paying high-interest loans. By choosing the right scheme, registering your startup, and preparing a clear business plan, you can improve your chances of getting support. Government grants are not just money—they are a chance to grow, innovate, and succeed with confidence. So, take the first step, explore your options, and turn your startup idea into reality with the right support.
Frequently Asked Questions
1. What are the initial steps to start a business with government support?
First, decide on your business idea and check which government schemes fit it. Next, register your startup as a Private Limited Company, LLP, or Partnership Firm. Then, apply for DPIIT recognition via the Startup India portal. After that, prepare a solid business plan and apply for grants or loans through the relevant government portals.
2. How do I determine which government scheme is suitable for my business idea?
Start by identifying your industry: technology, agriculture, manufacturing, etc. Then, explore schemes on trusted portals like Startup India, MSME, or BIRAC. Read each scheme’s objective and eligibility rules. Choose one that matches your startup’s goals, product type, and funding needs. You can also consult a startup mentor or incubator for guidance.
3. Are there any grants available for first-time entrepreneurs?
Yes, several grants support first-time business owners. For example, the Startup India Seed Fund Scheme (SISFS), Biotechnology Ignition Grant (BIG), and PMEGP are designed to help new entrepreneurs. These schemes offer funding without the need for repayment and are designed to help fresh ideas develop into viable businesses.
4. What is the process to apply for the Startup India initiative?
Visit the Startup India portal. Create an account and fill in your business details. Upload the necessary documents, such as your PAN, business registration certificate, and details about your product or service. Once verified, you’ll receive DPIIT recognition. This makes you eligible for grants, tax benefits, and funding schemes under the Startup India initiative.
5. Can I avail of multiple government schemes simultaneously?
In most cases, you can apply for more than one scheme if your startup meets the eligibility criteria. However, some schemes may not allow overlap in funding or benefits. Always check the terms and conditions carefully before applying. It’s best to use different schemes for different needs, like funding, training, or incubation.