How to start your entrepreneurial gig with government help?
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
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.
he 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.
he 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.
rominent 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 project cost 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 project cost 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.
Highlights of the Prime Minister's Employment Generation Programme
Objective: Aimed at financing new enterprises and generating employment.
Enhanced Project Cost Limits:
Service Units: Increased from Rs. 10 lakh to Rs. 20 lakh.
Manufacturing Units: Raised from Rs. 25 lakh to Rs. 50 lakh.
Financial Assistance Breakdown:
Entrepreneur's Contribution: 5%-10% of project cost.
Government Subsidy: 15%-35%, based on various criteria.
Bank Funding: 60%-75% as term loan, working capital loan, or composite loan.
Bank Sanctions:
General Category: 90% of project cost.
Interest Rates and Repayment:
Interest rates depend on the applicant's profile and bank policies.
Repayment tenure: 3 to 7 years after an initial moratorium.
Eligibility Criteria:
Minimum age: 18 years.
Educational Qualification: Minimum 8th standard pass.Applicable only for new projects.
Mandatory EDP training for loan sanction and release.
Eligible Entities:
Individual Business Owners and Entrepreneurs.