PMEGP vs. MUDRA Loan is a highly relevant topic for aspiring entrepreneurs in India who seek financial support to kickstart or expand their ventures. With numerous government loan schemes available, understanding the key differences and benefits between these two flagship programs is essential. This detailed comparison not only simplifies your decision-making but also empowers you to choose the best-suited funding option for sustainable business success. We’ll walk you through 7 strong reasons that will help you confidently navigate through these schemes and boost your startup journey.
📌 Which is Better — PMEGP or MUDRA Loan?
PMEGP vs. MUDRA Loan: PMEGP is ideal for new manufacturing or service-based businesses needing subsidy + capital. MUDRA suits existing micro-enterprises needing quick working capital without collateral. Choose based on stage, scale, and financial needs of your venture.
PMEGP vs. MUDRA Loan comparison starts with their core purpose. PMEGP (Prime Minister’s Employment Generation Programme) aims to generate employment by encouraging self-employment through manufacturing/service units. MUDRA (Micro Units Development and Refinance Agency) offers easy collateral-free loans to micro and small businesses for business growth.
PMEGP: Focus on new business setups and employment generation.
MUDRA: Focus on business expansion, working capital, or equipment purchase.
2. ✅ Loan Amount & Subsidy Support
In terms of business loan comparison, PMEGP provides higher loan amounts with government subsidies up to 35%, making it attractive for large-scale manufacturing or service units. MUDRA offers loans under three categories — Shishu (up to ₹50,000), Kishor (₹50,000–₹5 lakh), and Tarun (₹5–10 lakh).
Feature
PMEGP
MUDRA Loan
Loan Amount
Up to ₹25 lakh
Up to ₹10 lakh
Subsidy
15–35% depending on category
None
Collateral
Not required (CGTMSE cover)
Not required
3. ✅ Eligibility Criteria
Eligibility plays a key role in choosing between PMEGP vs. MUDRA Loan. PMEGP is open to individuals above 18 years with a minimum 8th pass qualification, while MUDRA loans can be availed by any Indian citizen running a small business like a shop, workshop, trading unit, etc.
PMEGP restricts loan usage strictly to new manufacturing or service units. In contrast, MUDRA offers more flexibility — suitable for inventory purchase, working capital, business vehicles, or expansion.
Use PMEGP for long-term infrastructure development and employment generation.
Use MUDRA for cash flow needs and business efficiency improvements.
5. ✅ Repayment Terms & Interest Rates
Interest rates for PMEGP loans typically range between 11–12% p.a. (after subsidy). Repayment period extends up to 7 years. MUDRA loans are generally provided at 9–12% interest with repayment up to 5 years depending on the bank.
6. ✅ Support Mechanism & Handholding
PMEGP provides more extensive handholding support, including entrepreneurship training, project vetting, and implementation monitoring by KVIC and DICs. MUDRA offers fast-track loan approval with less guidance but more flexibility.
7. ✅ Real-Life Use Cases and Success Stories
PMEGP vs. MUDRA Loan comparisons are incomplete without practical insights:
PMEGP Case: A woman entrepreneur from Odisha received ₹20 lakh loan and ₹5.5 lakh subsidy to start a spice processing unit employing 12 locals.
MUDRA Case: A Delhi-based mechanic availed a ₹2 lakh MUDRA loan to buy modern tools and grow his customer base by 3x within a year.
Ultimately, the PMEGP vs. MUDRA Loan decision depends on your business’s stage, size, and funding requirements. PMEGP is ideal for new ventures seeking substantial capital and support. MUDRA is perfect for existing businesses needing quick, small-scale financial boosts. Evaluate your goals and choose the plan that aligns with your entrepreneurial mission.
FAQs: PMEGP vs. MUDRA Loan
1. Can I apply for both PMEGP and MUDRA loan?
Not simultaneously for the same project, but you can apply for MUDRA later for expansion after a PMEGP-funded setup is operational.
2. Which loan has a faster approval process?
MUDRA loans have quicker processing, often within 7–10 working days. PMEGP takes longer due to project scrutiny and training.
3. Is collateral required for PMEGP or MUDRA?
Both loans are collateral-free, though banks may request additional guarantees above ₹10 lakh. PMEGP uses CGTMSE cover.
4. What is the minimum qualification for PMEGP?
The applicant must be at least 18 years old and have passed the 8th standard to be eligible under PMEGP.
5. Do I need a business plan for MUDRA loan?
Yes, a simple business plan or income estimate is needed. However, it’s far less complex than PMEGP’s detailed DPR requirements.
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Jon
Hello friends, my name is Jon Smith, I am the Writer and Founder of this blog and share all the information related to Earn Money Online and Business ideas through this website
