Second PMEGP Loan- For Upgradation / Expansion of Existing

About Scheme

• KVIC Under the Ministry of MSME , Government of India, New Delhi is presently implementing the PMEGP as the National Level Nodel Agency.
• A Provision has been made for sanctioning a 2nd loan with subsidy for upgrading the existing units, which are performing well in terms of turnover , profit making and loan repayment.
• For Manufacturing units, financial assistance upto an amount of Rs.1 Crore would be provided , and for service trading units Financial assistance upto an amount of Rs.25.00 lakhs would be provided with a subsidy of 15% (20% for NER and Hilly States)

Objective

• To fulfill the need of additional financial assistance for upgrading and expansion to the successful / well-performing units. 
• To cater to the need of the entrepreneur for bringing new technology automation so as to modernize the existing unit. 
• To enhance the productivity of the existing units with the inclusion of additional dose of funding. 
• To enhance the capacity of the existing unit with the additional financial assistance assuring additional wage employment.

Quantum and Nature of Financial Assistance

2nd Loan for up-gradation of existing PMEGP / MUDRA units :

All Categories - 10% (of proposed expansion / upgradation cost)-15% (20% in NER and Hill states)

• The Maximum cost of project / unit admissible under manufacturing sector for upgradation is Rs.1 Crore and the maximum subsidy would be Rs.15 lakhs (Rs.20 lakhs for NER and Hill States)
• 
  The Maximum cost of the project / unit admissible under Service / Trading sector for upgradation is Rs.25 lakhs and the maximum subsidy would be Rs.3.75 lakhs (Rs. 5 Lakhs for NER and Hill States)
• The Balance amount of the total project cost will be provided by bank as term loan. The Applicant can utilize the loan amount for investment on fixed assets i.e., for construction of building / purchase of required new machineries / installation of machinery etc.
• Under the Term Loan Component (Construction of building / industrial shed , machinery & equipment etc.) the construction of own building may be included and ceiling of construction should not usually exceed 25% of the total sanctioned project cost. 
• The capital expenditure component including cost of construction should be upto 60% of the total project cost . The working capital cost would be upto 40%. However the financing bank can decide the criteria at the time of sanction of loan based on the nature of the project.

Eligibility Conditions of the beneficiaries

• All existing units financed under PMEGP / MUDRA Scheme whose margin money claim has been adjusted and the first loan availed should have been repaid in stipulated time are eligible to avail the benefits.
• The Unit has been making profit for the last three years. 
• Beneficiary may apply to the same financing bank , which provided first loan or to any other bank , which is willing to extend credit facility for Second Loan. 
• The 2nd loan should lead to additional employment generation.

Implementing Agencies

• KVIC 
• State KVIBs and district industries centers in rural areas. 
• In urban Areas the scheme will be implemented by the SDIC
• KVIC & DIC will also involve NSIC , MSME-Dis , RSETIs , RUDSETIs , it is etc.

Financial Institutions

• All Public Sector Banks 
• All Regional Rural Banks 
• Cooperative Banks approved by State Level Task Force Committee headed by Principal Secretary (Industries/MSME) / Commissioners (Industries) 
• Private Scheduled Commercial Banks approved by state level Task Force Committee Headed by Principal Secretary (Industries/MSME) / Commissioner (Industries)
• Small Industries Development Bank of India (SIDBI)

Identification of the beneficiaries & other procedural formalities

• Units would be selected from all over the country.
• On PMEGP e-portal , a separate application link will be given for submitting application by the existing units for up-gradation. 
• The State/District-level Agencies (KVIC/KVIB/DIC), after preliminary scrutiny , will forward the application. Before recommending the application to the Banks, the State / District – level agencies will ensure that the application is complete in all respects and the applicant has fulfilled all the criteria mentioned in the guidelines. The agencies shall complete the scrutiny of the application within 15 days and forward the application to the banks. If the application is found to be order . In case , the application is not in order ,they may return the application along with reasons , within 15 days.
• The Concerned bank will appraise and sanction the project within 60days. After release of loan , the Bank will claim Margin Money Subsidy (MMS) as per the procedure prevalent for PMEGP Units. The MMS will be kept as Term Deposit Receipt (TDR) for 18 months. No interest will be paid on the TDR and no interest will be charged on the corresponding amount of the loan disbursed. The TDR amount will be adjusted in the loan account after installation of the machinery and on the basis of positive report of a joint physical verification of the implementing agency and the Bank. 
• A separate MIS for the 2nd dose of financial assistance shall be provided in the PMEGP e-Portal for the purpose of monitoring by all the stakeholders.
• Joint Physical verification of the unit by the implementing agencies & the Bank shall be undertaken at least twice in a year & details of the joint physical verification will be uploaded on the Portal.
• Third Party Physical verification shall be conducted by KVIC through outsourcing an independent agency , on completion of 2 years of Upgradation. 
• CGTMSE Coverage : The beneficiary may opt for covering the project under CGTMSE Scheme by paying requisite CGTMSE fees.

Documents to be uploaded:

• Previous Loan Sanction Letter issued by the bank Proof of MM Claims adjusted against previous loan & Bank Certificate for Full Loan Repayment.
• Project report for expansion / upgrading the unit. 
• Passport size photograph.
• IT Returns for the last 3 years. 
• Annual accounts certified by CA for the last 3 years