Published by Pradrix
If you are starting a new unit and want a subsidy, look at PMEGP first. If you need a straightforward loan up to Rs 20 lakh for a micro business, Mudra is the usual route. If you are a woman, SC or ST entrepreneur starting your first venture and your loan need is Rs 10 lakh or more, check Stand-Up India, keeping its current status in mind.
The three schemes look similar in advertisements, but they were built for different people at different stages. PMEGP gives a capital subsidy and is only for new units. Mudra is a loan framework with no subsidy. Stand-Up India is a loan framework for a defined group of first time entrepreneurs, and its next version has been announced but not yet notified.
Test eligibility first, then amount, then the value of the subsidy. This article follows that order.
The short version: the three schemes side by side
Read the eligibility row first. If you fail that test, the amount does not matter.
| Point | PMEGP | Mudra (PMMY) | Stand-Up India |
|---|---|---|---|
| What it is | Credit linked margin money subsidy on a bank loan for a new micro enterprise | Collateral free loans through banks, NBFCs, MFIs and regional rural banks | Composite bank loan, term loan plus working capital |
| Who can apply | Adult aged 18 or above setting up a new micro enterprise, one project per family | Non corporate, non farm micro enterprises, through a lender | SC, ST and women entrepreneurs aged 18 or above |
| New or existing | New units only. Existing units are not eligible | New and existing micro enterprises, subject to lender appraisal and category rules | Greenfield only, meaning a first time enterprise |
| Amount | Project cost up to Rs 50 lakh for manufacturing, up to Rs 20 lakh for services or business | Up to Rs 20 lakh across four categories, see below | Rs 10 lakh to Rs 1 crore under the last notified framework, see status note below |
| Subsidy or guarantee | Subsidy of 15% to 35% of project cost, by category and location | No capital subsidy | No capital subsidy in the framework described here |
| Your contribution | 10% general category, 5% special category | Set by the lender. No scheme subsidy to offset it | Minimum 10% in lender guidance, loan covering up to 85% of project cost |
| Where to apply | PMEGP e portal, through KVIC, State KVIB or District Industries Centre | Bank, NBFC or MFI, or through Udyami Mitra or JanSamarth | standupmitra.in or a bank branch |
| Implementing structure | KVIC with State KVIBs and District Industries Centres | Lenders give the loans. Mudra does not lend directly | Bank branches, at least one SC or ST and one woman borrower per branch |
Only PMEGP gives a subsidy. If an agent calls Mudra or Stand-Up India a subsidy scheme, ask for the written guideline. None of the three is an automatic approval: the lender still appraises the project, repayment capacity and documents.
Keep your Udyam Registration in place before you apply. See Udyam Registration benefits and how to register free.
Start with the eligibility filter, not the loan amount
Step 1: Is the business new?
PMEGP requires a new unit. An existing shop, workshop or service unit cannot take PMEGP for its current business. Stand-Up India also requires a greenfield enterprise, meaning a first time venture.
Mudra does not carry the same new unit condition. An existing micro enterprise usually examines Mudra first, or a regular MSE loan backed by a guarantee. If you have repaid a first PMEGP or Mudra loan, a separate upgradation route exists, covered below.
Step 2: What is your entrepreneur category?
Stand-Up India is restricted to SC, ST and women entrepreneurs. For a non individual entity, at least 51% of shareholding and control must be held by an SC, ST or woman entrepreneur. The borrower must not be a defaulter to a bank or financial institution.
PMEGP is open to general applicants, but category changes the economics. Women are in the special category, with SC, ST, OBC, minorities, ex servicemen, persons with disabilities, and North Eastern Region, hill and border areas. Special category means higher subsidy and lower contribution. Mudra focuses on the enterprise and the loan category by amount.
Step 3: How much do you actually need?
For Mudra, Shishu covers up to Rs 50,000, Kishore covers above Rs 50,000 to Rs 5 lakh, and Tarun covers above Rs 5 lakh to Rs 10 lakh. Tarun Plus covers above Rs 10 lakh to Rs 20 lakh, only for an entrepreneur who has successfully repaid a previous Tarun loan. A first time borrower who needs Rs 14 lakh cannot simply choose Tarun Plus.
For PMEGP, the key figure is project cost, not only the loan amount. Your contribution and the subsidy are calculated on project cost, and land cost is excluded.
For Stand-Up India, the last notified range starts at Rs 10 lakh. A Rs 4 lakh need does not fit. A Rs 40 lakh need does, if the category and greenfield tests are met, subject to the status check below.
PMEGP in detail: the only subsidy among the three
The Prime Minister's Employment Generation Programme, PMEGP, is a credit linked subsidy programme for new micro enterprises. The bank gives the loan. Government support comes as margin money subsidy on the project cost.
You must be 18 or above, the unit must be new, and only one project per family is allowed. Implementing agencies are KVIC, the State Khadi and Village Industries Boards, and the District Industries Centres. Applications move through the PMEGP e portal and one of those agencies, alongside the bank.
Subsidy rates and your own contribution
| Applicant category | Location | Subsidy on project cost | Your own contribution |
|---|---|---|---|
| General | Urban | 15% | 10% |
| General | Rural | 25% | 10% |
| Special | Urban | 25% | 5% |
| Special | Rural | 35% | 5% |
A rural special category applicant gets the highest rate, 35%, and the lowest contribution, 5%.
Do not treat the subsidy as cash in hand. It is locked in a term deposit for 3 years, then adjusted against the loan. Your first year plan must work without spending it.
Project cost caps, and a note on older pages
Use Rs 50 lakh for manufacturing and Rs 20 lakh for services or business for planning.
The KVIC FAQ page opened for this research still shows the older caps of Rs 25 lakh for manufacturing and Rs 10 lakh for services. Current scheme reporting across the guides checked consistently gives Rs 50 lakh and Rs 20 lakh as the raised caps, so this article uses those figures. Reverify the cap on the live PMEGP e portal before you file.
Land cost is excluded from project cost. Keep land as a separate line in your funding plan.
EDP training is compulsory: 6 working days for projects up to Rs 5 lakh, 10 working days above Rs 5 lakh. Keep time for it.
The second loan for upgradation
The research base records a second loan for existing PMEGP, REGP or Mudra units that repaid the first loan and were profit making for 3 years, with subsidy of 15%, and 20% for the North Eastern Region and hills, up to Rs 1 crore in manufacturing and Rs 25 lakh in services. Confirm current terms before you rely on it. The main rule stands: a first application is for new units only. See the PMEGP loan deep dive.
Mudra in detail: loans up to Rs 20 lakh, in four stages
The Pradhan Mantri Mudra Yojana, PMMY or Mudra, covers loans through banks, non banking financial companies, micro finance institutions and regional rural banks, to non corporate, non farm micro enterprises. Mudra itself does not lend directly, and there are no authorised agents for taking a Mudra loan on your behalf.
The four categories
| Category | Loan amount | Who it is for |
|---|---|---|
| Shishu | Up to Rs 50,000 | Smallest ticket loans for a micro activity |
| Kishore | Above Rs 50,000 to Rs 5 lakh | A growing micro enterprise |
| Tarun | Above Rs 5 lakh to Rs 10 lakh | An established micro enterprise with a bigger requirement |
| Tarun Plus | Above Rs 10 lakh to Rs 20 lakh | Only entrepreneurs who have successfully repaid a previous Tarun loan. Added with effect from 24 October 2024 |
The ceiling to use is Rs 20 lakh. A lender page in the research base links Tarun Plus to a higher figure. Do not use it for planning. The verified category structure caps Tarun Plus at Rs 20 lakh.
There is no capital subsidy under Mudra, and no single scheme interest rate. Interest is set by the lender. Compare the stated rate, charges and terms in writing.
Loans are described as collateral free. That does not mean appraisal free: the lender examines purpose, viability and repayment ability. For larger MSE loans, see CGTMSE: loan without collateral, on guarantee cover up to Rs 10 crore from 1 April 2025. A guarantee framework is not itself a loan scheme.
Apply at a lender, or through Udyami Mitra at udyamimitra.in, or JanSamarth. Choose the category by need and repayment record, not by the maximum available. See the Mudra loan guide.
Stand-Up India in detail: a larger first loan for a defined group
Stand-Up India supports bank lending to SC, ST and women entrepreneurs setting up a greenfield enterprise in manufacturing, services, trading or allied agriculture. The loan is composite, meaning a term loan and working capital in one facility.
The applicant must be 18 or above, in an eligible category, and setting up a first time venture. For a non individual entity, at least 51% of shareholding and control must be with the eligible entrepreneur. The borrower should not be a defaulter. Under the last notified framework, the composite loan range is Rs 10 lakh to Rs 1 crore.
The per branch expectation, at least one SC or ST borrower and at least one woman borrower per branch, creates no entitlement for a specific applicant, but a branch is expected to know the scheme.
Lender guidance indicates a minimum 10% own contribution, loan covering up to 85% of project cost, repayment up to 7 years and moratorium up to 18 months. Confirm the exact terms your bank will sanction, in writing, before you commit to suppliers or premises.
Status box: what is live and what is only announced
The published scheme term in the sources checked ran to 31 March 2025. The Union Budget for 2025-26 announced a new scheme for 5 lakh first time women, SC and ST entrepreneurs, with term loans up to Rs 2 crore. Reporting in March 2026, recorded in the research base, states that a revamped Stand-Up India with a doubled limit to Rs 2 crore is being redrafted and will be launched soon, with banks following the older Rs 10 lakh to Rs 1 crore framework in the interim and standupmitra.in still live.
| Item | Status |
|---|---|
| Rs 10 lakh to Rs 1 crore composite loan | Last notified framework. Use this range in any bank discussion today, and confirm the bank is accepting applications on that basis |
| Rs 2 crore limit | Announced in Budget 2025-26. Not yet notified as an available limit in the research base. Do not plan a project on it as if it can be sanctioned today |
Before you apply, confirm live status on standupmitra.in and at the branch, and ask: on what notified framework will my application be processed today?
A worked example: the same founder, three different answers
A woman entrepreneur in Indore is setting up a new garments manufacturing unit, her first venture. Project cost is Rs 20,00,000, excluding land. She is a special category applicant under PMEGP as a woman, and the unit is urban, in Indore city, so the urban special rate applies.
PMEGP route, step by step
Step 1: Own contribution at 5%. Rs 20,00,000 multiplied by 5% equals Rs 1,00,000.
Step 2: Subsidy at 25% for urban special category. Rs 20,00,000 multiplied by 25% equals Rs 5,00,000, held in a term deposit for 3 years and then adjusted against the loan.
Step 3: Bank loan. Rs 20,00,000 minus Rs 1,00,000 minus Rs 5,00,000 equals Rs 14,00,000.
Step 4: Check. Rs 1,00,000 plus Rs 5,00,000 plus Rs 14,00,000 equals Rs 20,00,000.
She puts in Rs 1 lakh, the bank loan is Rs 14 lakh, and Rs 5 lakh is subsidy, subject to the lock in.
If the same unit were rural, subsidy at 35% would be Rs 20,00,000 multiplied by 35% equals Rs 7,00,000, and the bank loan would be Rs 20,00,000 minus Rs 1,00,000 minus Rs 7,00,000 equals Rs 12,00,000. Location alone changes the loan by Rs 2,00,000. Confirm the urban or rural classification of the unit address at the start.
Under Mudra, Rs 14 lakh does not fit a first time borrower: Tarun caps at Rs 10 lakh, and Tarun Plus requires a repaid Tarun loan. Under Stand-Up India, her profile fits, subject to the status check and bank appraisal.
Decision framework: if this is your situation, start here
| If this is true | Start with | Why |
|---|---|---|
| You are setting up a new micro unit and a subsidy changes whether the project is viable | PMEGP | Only scheme of the three with a capital subsidy, 15% to 35% of project cost |
| You are general category, urban, and the subsidy is small | Compare PMEGP with a direct Mudra or bank loan | At 15%, do the arithmetic first |
| You need up to Rs 50,000 | Mudra Shishu | Smallest category |
| You need above Rs 50,000 to Rs 5 lakh | Mudra Kishore | Mid range category for a growing micro enterprise |
| You need above Rs 5 lakh to Rs 10 lakh | Mudra Tarun | No Tarun Plus repayment condition |
| You need above Rs 10 lakh to Rs 20 lakh and have repaid a Tarun loan | Mudra Tarun Plus | The repayment record is the entry condition |
| You need above Rs 10 lakh to Rs 20 lakh and have not repaid a Tarun loan | Test PMEGP if new, Stand-Up India if you meet its tests, or a regular MSE loan | Tarun Plus is not open on amount alone |
| You are SC, ST or a woman, first venture, needing Rs 10 lakh to Rs 1 crore | Stand-Up India, after the status check | Category, greenfield status and amount align |
| Your business already exists and is not an upgradation case | Mudra, subject to category and appraisal | PMEGP and Stand-Up India require a new or greenfield venture |
| None of the three fits on eligibility or amount | Ask about a regular MSE loan with CGTMSE guarantee cover | CGTMSE is a guarantee framework, not a loan scheme. Cover is recorded up to Rs 10 crore from 1 April 2025, and the lender still decides |
Keep project cost, your contribution and the loan amount as three separate numbers. Mixing them causes errors.
Common mistakes that waste weeks
1. Applying to PMEGP for an existing unit. PMEGP is for new units only. Check whether the upgradation second loan applies, or use a framework that covers existing enterprises.
2. Applying for Tarun Plus without a repaid Tarun loan. The category requires that record. Without it, plan on Tarun, PMEGP, Stand-Up India or a regular loan, as eligibility allows.
3. Budgeting the PMEGP subsidy as cash in the first year. It is locked for 3 years. Build the first year on your contribution and the bank loan, and treat the subsidy adjustment as a later event.
4. Including land cost in the PMEGP project cost. Land is excluded. Including it inflates the project cost and the expected subsidy, and forces a revision of the project report later.
5. Assuming Stand-Up India Rs 2 crore is live. The figure is announced, not notified in the research base. Do not sign for premises or order machinery sized to Rs 2 crore until a notification and a bank sanction support it.
A related error: paying an intermediary who promises a guaranteed sanction or subsidy. If someone offers certainty for a fee, ask for the guideline clause and verify it on the official portal first.
Frequently asked questions
Choose the category by amount: Shishu up to Rs 50,000, Kishore to Rs 5 lakh, Tarun to Rs 10 lakh, and Tarun Plus to Rs 20 lakh if you have repaid a Tarun loan. Apply at a bank, NBFC or MFI, or through Udyami Mitra or JanSamarth. Mudra itself does not lend directly and has no authorised agents.
Sources: KVIC PMEGP portal and FAQ, Mudra category sources via lender scheme pages, Godrej Capital and Bajaj Finserv scheme guides, TaxGuru MSME schemes guide, and CGTMSE cross reference as recorded in the research package, verified November 2026. Rules and rates change; check the official portal before you apply.