Government Business Loan Schemes 2024

There are thousands of unemployed individuals in the country today looking to avail loans to become self-reliant and financially independent. The good news is that a number of banks, Non-banking Financial Companies (NBFCs), private lenders, and even the Government of India provide loans to those that are looking to start their entrepreneurial journey. However, when it comes to banks and private lenders, there are a number of factors such as high rates of interest and strict eligibility criteria that make availing and repaying the loan quite an uphill task.

On the other hand, government business loans for the unemployed come with easier and more flexible repayment options, are easier to procure and are specifically designed to allow those that are unemployed to start their ventures with relative ease.

Some of the more popular government loan schemes for the unemployed/new startup business are:

  1. Prime Minister Rozgar Yojana (PMRY)
  2. NEEDS Scheme
  3. Prime Minister’s Employment Generation Programme (PMEGP)
  4. Karma Sathi Prakalpa by the West Bengal government

1. Prime Minister Rozgar Yojana (PMRY)

This scheme by the Government of India has been tailored to meet the requirements of unemployed youth who wish to start their own venture. PMRY can be availed by those looking to start their entrepreneurial journey in the business, manufacturing, trade, or service sector. This govt. loan for the unemployed is available for those who meet certain eligibility criteria.

Features and Benefits of PMRY

  • The project cost for PMRY is Rs. 2 lakh for the business sector and Rs. 5 lakhs for the service and industry sectors. The progress of the said project will be monitored every quarter by a State Level PMRY committee
  • The subsidy is limited to 15% of the project cost. A ceiling of Rs.7,500 per applicant has been decided. However, this amount can vary depending on the location. For example, if the applicant is from the North-Eastern region of India, the ceiling has been increased to Rs. 15, 000 per person
  • The normal rate of interest will be charged based on the location as well as the financial institution providing the loan. The repayment term will range between 3 to 7 years and an initial moratorium may be provided
  • For a project that costs up to Rs.1 lakh, no collateral is required

Eligibility Criteria for PMRY

  • Applicant must be educated at least until 8th standard and preference will be given to those who have been trained in a trade from a government recognized and approved institution for at least 6 months
  • Individuals must be between the age group of 18 to 35 years with a 5-year relaxation if the applicant is from a North-Eastern state and 10 years for SC/ST applicants, physically handicapped applicants, ex-servicemen, and women
  • The income of the beneficiary along with his/her parents or spouse must not be over Rs.40,000 per annum
  • Applicant must be a resident of that particular area for at least 3 years and should not be a defaulter to any financial institution or nationalized bank. Additionally, the applicant must not be a part of any other government-subsidized programs as well

How to Apply for PMRY

  • Applicants need not worry about traveling up and down to apply for this as the entire process is now online. They will have to visit, download the application form and fill it
  • This form will then have to be submitted to the respective bank that falls under the PMRY scheme along with all necessary documents such as Address proof, ID proof, experience, and qualification certificates, copy of the proposed project, income certificate issued by Mandal Revenue Officer, and caste certificate if applicable

2. NEEDS Scheme

The New Entrepreneur cum Enterprise Development Scheme (NEEDS) aims to provide educated youth who wish to pursue entrepreneurship with capital as well as interest subsidy. This scheme is promoted by the Directorate of Industries and Commerce, Government of Tamil Nadu, and is mainly for those who have a degree, vocational training, or diploma from any recognized institution. While all manufacturing and service activities are eligible for benefits under this scheme, the priority is given to eco-friendly projects or those that place importance on energy conservation and are export-oriented. Activities such as sericulture, pisciculture, other agricultural activities, sawmills, cement, manufacture of fertilizers, firecrackers, etc. are ineligible for assistance under the NEEDS scheme.

Features and Benefits of NEEDS Scheme

  • The NEEDS project cost varies between Rs. 10 lakhs and Rs. 5 crores
  • Under this scheme, a subsidy that amounts to 25% of the project cost, up to Rs.30 lakh is provided. This includes margin money and capital expenditure
  • The cost of land may also be included in the project cost either at market value or the guideline value, whichever is lower
  • Additionally, the cost of building construction (laboratory, office, etc.) can be included as long as it does not exceed 25% of the project cost and this does not include rented or leased building
  • The repayment tenure for this scheme is up to 9 years and also includes a 2 year holiday period i.e., a period of time where EMI need not be paid
  • Beneficiaries may have to provide collateral or security that amounts to 50% of the proposed loan amount

Eligibility Criteria for NEEDS Scheme

  • Educated youth between the ages of 21 and 35 years who have a degree, diploma, vocational/ITI training from a recognized institution can apply for this scheme
  • If the applicant falls under a special category, (SC/ST/BC/Females. Ex-servicemen/Transgender/differently-abled/other minorities) the age limits are between 21 years and 45 years
  • The applicant must compulsorily be a resident of the State of Tamil Nadu for a minimum of 3 years
  • Individuals who have previously availed benefits under other government schemes for the unemployed such as PMRY, PMEGP, SHG, UYEGP, or others will not be eligible for assistance
  • Additionally, defaulters to any Tamil Nadu Industrial Investment Corporation Limited or Commercial Bank will not be eligible for this scheme

How to Apply for NEEDS

  • Applicants will have to visit this link and click on ‘Apply Online’ and then ‘New Application’
  • They will then be redirected to a page wherein the eligibility criteria will be displayed and if all requirements are met, they will have to click on ‘Next’
  • The necessary documents to be scanned and uploaded will be provided and these include proof of age, proof of income, copy of degree/diploma certificate, project report, building plan, etc.
  • In case applicants are applying for the first time they will have to select the organization type, fill in the application form, and submit it with the necessary documents

3. Prime Minister’s Employment Generation Programme (PMEGP)

Another government loan for the unemployed, this scheme is implemented by the Khadi and Village Industries (KVIC) at the central level. This program aims to create employment opportunities in rural and urban areas by setting up new avenues of self-employment projects and micro-enterprises. Through this program, local artisans are also expected to get a boost and utilize their skills to become self-sustainable.

Features and Benefits of PMEGP

  • The maximum project cost for the manufacturing sector is Rs.25 lakhs and the cost for the service/business sector is Rs.10 lakhs
  • The rate of subsidy under PMEGP varies based on the category. For those under the general category, the subsidy is 15% for urban areas, 25% for rural areas, 25% for those under special categories in urban areas, and 35% in rural areas
  • While there is no income ceiling for the set-up of projects, assistance under this program is only provided to new units that are yet to be established

Eligibility Criteria for PMEGP

  • Applicants should be above 18 years and should have studied until at least 8th standard for projects that cost over Rs.10 lakh in the manufacturing sector and over Rs. 5 lakh in the service or business sector
  • This program provides assistance to new projects only
  • Individuals that have already received government subsidy under other government employment schemes are not eligible to receive the benefits of PMEGP

How to Apply for PMEGP

Applicants who wish to avail themselves of the benefits of PMEGP will have the option of applying both online and offline.

Offline Application

  • The State or Divisional Directors of Khadi & Village Industries Commission (KVIC) will advertise for applications locally either through electronic or print media and individuals can submit applications along with project proposals by following the instructions given in these advertisements

Online Application

  • Individuals who wish to apply online can do so by visiting this link.
  • The application form will have to be filled and a printout of the same should be submitted to the respective offices along with a copy of the project report and other relevant documents mentioned in the application form.

4. Karma Sathi Prakalpa

Launched by the West Bengal Government in 2020, Karma Sathi Prakalpa or Karma Sathi Prokolpo is aimed at providing subsidies and soft loans to unemployed youth in order to help them become self-sufficient and to create employment opportunities in the state. A budget of Rs. 500 crores have been allotted for the same.

Features and Benefits of Karma Sathi Prakalpa

  • Around 1 lakh beneficiaries will be selected by the government of West Bengal to receive soft loans to help them start their own business
  • The beneficiary, once selected, can receive 80% of the cost of business as a soft loan or up to Rs.2 lakhs
  • 50% of the annual bank interest will be reimbursed by the government for a period of three years if the beneficiary repays interest on time
  • Additionally, subsidies may also be provided by the government to help individuals take up new projects as well

Eligibility Criteria for Karma Sathi Prakalpa

  • The applicant must be a permanent resident of West Bengal
  • The applicant must have completed the 10th standard from a recognized board

How to Apply for Karma Sathi Prakalpa

  • Applicants will have to visit the official Karma Sathi Prakalpa website
  • They will have to create an account or log in if an account has already been made and then click on ‘Apply Now’
  • Applicants will have to fill and submit the form along with necessary documents such as an Aadhaar card, Voter ID, required education certificate, photo, etc.
  • Once submitted, applicants will be contacted if their application has been accepted


The Government of India and other state governments of the country have put forth a number of schemes that provide loans to unemployed youth with the aim of helping them become self-reliant and in turn generate employment opportunities as well. Each scheme comes with its own unique features and benefits. Individuals are encouraged to apply for a loan that suits their requirements and financial situation.

Government Business Loan Schemes FAQs

The Indian Government has provided 100+ schemes to help individuals establish, run, and expand their businesses. 

You can visit any bank or microfinance company supporting these schemes and apply for a loan based on your needs. You can also select and apply for a loan by visiting the Startup India page.

Government business loans are funds the government provides to business owners, startups, individuals, and MSMEs to support their businesses and drive expansion. 

Through these loans, Government offers easy access to anyone looking to convert their business ideas into profitable ventures. 

These loans are offered in the form of schemes, initiated by the government, and supported by financial institutions such as private and public sector banks, non-banking financial companies (NBFCs), etc.

Pradhan Mantri Rozgar Yojana, or PMRY, is a government-launched initiative to provide support to unemployed individuals and women who want to start a business. This scheme allows unemployed youth between 18 - 35 years of age to borrow up to Rs. 2 lakhs based on their sector.

Individuals or businesses can borrow a minimum of Rs. 10,000 from government loan programs. 

Mudra Yojana is categorized depending on the loan amount in the following way.


Maximum Loan Amount



Rs. 50,000



Rs. 5 Lakhs

Businesses needing funds to stabilize their ventures


Rs. 10 lakhs

Businesses looking to expand


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