PMEGP Online Application 2026 — Step-by-Step on the KVIC e-Portal, Who Can Apply (Proprietors and SHGs, Not Companies or Partnerships), the 15–35% Margin-Money Subsidy on Projects up to ₹50 Lakh, the 60:40 Term-Loan Rule, Rural Certificate, Bank Sanction Sequence, EDP Training, Documents, Score Card and the Mistakes That Stop the Subsidy
15–35%
Margin-money subsidy — 15% urban / 25% rural for general; 25% urban / 35% rural for women, SC/ST/OBC, minorities, PwD, ex-servicemen, transgender, NER, hill and aspirational districts
₹50 L / ₹20 L
Maximum project cost for manufacturing / service units
Individuals & SHGs
Proprietors, self-help groups, registered societies, trusts and co-operatives — companies, partnerships and LLPs are not eligible
≤ 40%
Working-capital share of project cost — at least 60% must be capital expenditure (machinery, equipment, building)
Guide by BookMyCA's Chartered Accountants · pan-India serviceLast verified against official guidelines on 7 September 2026.
Video Explanation & Insights
Stop — check this before applying to PMEGP, or you may lose out
4 videos on this topic
Who can apply — and the checks that come before the portal
The Prime Minister's Employment Generation Programme is a credit-linked subsidy run by the Ministry of MSME through the Khadi and Village Industries Commission (KVIC) as nodal agency, implemented by KVIC state offices, State Khadi and Village Industries Boards (KVIB) and District Industries Centres (DIC), with the Coir Board for coir units. It funds new micro-enterprises: the bank lends 90–95% of the project cost, the government pays 15–35% of that cost as 'margin money' subsidy, and the entrepreneur brings 5–10%. Because it is aimed at first-generation entrepreneurs, only individuals (a proprietorship), self-help groups, institutions registered under the Societies Registration Act, production co-operative societies and charitable trusts can apply — a partnership firm, private limited company or LLP cannot, which is the single most common reason a well-prepared file is rejected.
| Check | Rule |
|---|---|
| Age and education | 18 years or above; no upper age; 8th standard pass for projects above ₹10 lakh (manufacturing) or ₹5 lakh (service); no income ceiling |
| Entity | Individual (proprietorship), SHG, society, trust or co-operative; one person per family (self and spouse) |
| Unit | New units only — an existing unit, or one that has taken subsidy under any other central or state scheme, is not eligible |
| Project cost | Up to ₹50 lakh manufacturing, ₹20 lakh service; land cost excluded; working capital not above 40% of project cost |
| Activity | Manufacturing and service; retail/trading not eligible except in notified areas (NER, hill and island UTs); negative list — meat processing and slaughter, intoxicants and tobacco, cultivation and animal husbandry, polythene carry bags below the notified thickness, and certain transport activities |
| Rural vs urban | Rural = area under a Panchayat (any population); the higher rural subsidy needs a certificate from the Gram Panchayat/Sarpanch on letterhead — the address on the project decides, not the residence |
| Own contribution | 10% general; 5% special category |
| Credit | The applicant's credit history must clear the bank's norms; a CIBIL problem does not fail the score card but fails the bank |
The online application, step by step
- 1Go to kviconline.gov.in → PMEGP e-portal → 'Online Application Form for Individual' (or 'for Non-Individual' for SHGs/institutions); enter Aadhaar and name, verify with OTP.
- 2Fill the form: sponsoring agency (KVIC / KVIB / DIC / Coir Board — pick the one whose office is nearest and responsive; DIC and KVIB both process urban and rural files), district, activity type (manufacturing/service), industry and product, project cost, first/second/third bank preference with branch, education, category, and whether EDP training has been done.
- 3Upload documents (see the checklist): photo, Aadhaar, PAN, education certificate, project report, caste/special-category certificate, rural-area certificate, and any EDP certificate; submit to receive the application ID and password — save both.
- 4Agency scrutiny: the office verifies the file against the score card (100 points on experience, education, project viability, category, area and so on) and forwards the application to your preferred bank; you can track status on the portal.
- 5Bank appraisal and sanction: the branch appraises the project (viability, margin, security is not required — CGTMSE cover is available), calls you for an interview, and sanctions the term loan and cash credit. The bank must sanction after the portal application reaches it — a loan sanctioned earlier cannot be brought under PMEGP.
- 6EDP training: complete the online Entrepreneurship Development Programme (up to 10 days depending on project size) through the notified platform and upload the certificate; disbursement and the margin-money claim wait for it.
- 7Disbursement and margin money: after the first disbursement the bank uploads the margin-money claim; KVIC releases the subsidy to the bank, which keeps it as a term deposit in your name for three years and adjusts it against the loan after physical verification that the unit is working.
No fee is payable to anyone for a PMEGP application. Agents who promise 'guaranteed' subsidy are selling the same form you can fill; what changes the outcome is eligibility, the project report and the bank's comfort.
The mistakes that stop a subsidy — from the videos
| Mistake | Why it fails | Fix |
|---|---|---|
| Applying as a partnership, company or LLP | Not an eligible entity | Apply as a proprietor; incorporate later once the margin money is adjusted |
| Project with 70% working capital | Working capital must not exceed 40% of project cost; PMEGP funds capital expenditure | Restructure — machinery, equipment and fixtures at 60% or more; cash credit up to 40% |
| Term loan only, no cash credit | Banks assess working capital as part of the project; a unit with no working capital is treated as unviable | Include one cycle of working capital in the project cost |
| Service unit asking ₹50 lakh | Subsidy is capped at a ₹20 lakh project for services | Claim on ₹20 lakh; borrow the rest as a plain loan if needed |
| Rural subsidy without the Gram Panchayat certificate | 35%/25% rural rate needs the Panchayat certificate for the unit's location | Get it on the Sarpanch's letterhead before submitting |
| Bank sanctions the loan before the portal application | The scheme funds loans sanctioned under it — a prior sanction is a normal loan | Apply on the portal first; let the bank sanction on the forwarded file |
| Bonus: only trying DIC | Files pile up at one office | KVIB and the KVIC state office take the same application |
Lock-in, repayment and the second loan
- •Lock-in: the margin money stays as a term deposit for three years; if the unit closes, the bank recovers it. The working-capital limit should be actually used (the guidelines expect utilisation of at least 75% of the sanctioned limit) before adjustment.
- •Repayment: term loan over 3–7 years with a moratorium as the bank allows; interest at the bank's normal rate for micro enterprises; no interest subsidy under PMEGP (state schemes such as Rajasthan's VYUPY add one).
- •Second loan for upgradation: units that repaid the first PMEGP/REGP/Mudra loan on time and are profitable can take a second loan — project cost up to ₹1 crore manufacturing / ₹25 lakh service — with 15% subsidy (20% in NER and hill states).
- •Records: keep the sanction letter, disbursement schedule, machinery invoices, GST registration (compulsory once turnover crosses the threshold; not needed at application), Udyam registration, and the EDP certificate for the physical verification.
Documents checklist
- •Passport photo, Aadhaar, PAN, and the highest education certificate.
- •Project report (executive summary, capital cost with quotations, working capital, projected P&L and cash flow, DSCR, employment).
- •Caste / special-category certificate (SC/ST/OBC/minority/PwD/ex-servicemen/transgender) where claimed.
- •Rural-area certificate from the Gram Panchayat for rural projects.
- •Property papers or rent agreement/NOC for the unit premises; population certificate if the agency asks.
- •Bank statement and any existing loan details; machinery quotations and supplier profiles.
- •For SHGs/institutions: registration certificate, bylaws, resolution authorising the application.
PMEGP application: questions we are asked
Yes if they are separate families (self and spouse rule); one person per family, and each unit must be genuinely separate.
Yes — service units are eligible up to a ₹20 lakh project; a software startup applies as a proprietorship, not a private limited company.
No — Udyam is taken after sanction and GST once required; the portal needs Aadhaar, PAN, education and the project report.
All three process the same scheme; choose the office that is responsive in your district — KVIB and the KVIC state office are often less crowded than DIC.
Typically 2–4 months from portal application to first disbursement, depending on the bank; the margin money follows the bank's claim within weeks.
Yes — eligibility check, score-card-ready project report, portal filing, bank follow-up, EDP and margin-money tracking; we also advise when a state scheme pays more.