PMEGP vs Mudra Loan vs Stand-Up India: Which Government Scheme Should You Apply For in 2026?

If you’re starting a business in India and need funding, three names come up again and again: PMEGP, Mudra Loan, and Stand-Up India. They’re not the same scheme wearing different names — each is built for a different kind of applicant and project size. Here’s exactly how they differ, and how to tell which one you should actually apply for.

PMEGP: Best for a New Manufacturing or Service Unit With a Subsidy

The Prime Minister’s Employment Generation Programme (PMEGP) funds brand-new manufacturing units up to ₹50 lakh and service or business units up to ₹20 lakh, and — unlike a regular loan — a real portion of it is a subsidy you never repay.

General category applicants get a 15% subsidy in urban areas and 25% in rural areas. Special category applicants — which includes SC, ST, OBC, minorities, women, transgender persons, ex-servicemen, persons with disabilities, and applicants from the North-East or hill areas — get 25% in urban and 35% in rural areas.

Your own contribution is just 10% of the project cost for general category and 5% for special category; banks appraise and fund the rest. You must be at least 18, and for projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), you’ll need at least a Class VIII education. Existing businesses aren’t eligible — this is strictly for new, viable units, applied for through KVIC, KVIB or your District Industries Centre, and completion of mandatory EDP training is required before the subsidy is released.

Mudra Loan (PMMY): Best for Very Small or Growing Micro-Businesses

The Pradhan Mantri Mudra Yojana is built in tiers that match your business stage, not a fixed amount for everyone:

• Shishu: up to ₹50,000 — for a brand-new, very early-stage business
• Kishor: ₹50,001 to ₹5 lakh — for a business that’s stabilising and expanding
• Tarun: ₹5,00,001 to ₹10 lakh — for scaling an established small business
• Tarun Plus: up to ₹20 lakh — for businesses that have already repaid a Tarun loan successfully

These loans are collateral-free (backed by the Credit Guarantee Fund), and women entrepreneurs typically get a 0.25–0.50% interest rate rebate. Apply through the Udyamimitra or JanSamarth portals, or directly at a bank branch, with KYC, Udyam Registration, and six months of bank statements — processing usually takes 7–15 working days.

Stand-Up India: Best for Women and SC/ST First-Time Entrepreneurs

This scheme is specifically for women entrepreneurs and SC/ST applicants setting up a greenfield (first-time) enterprise in manufacturing, services or trading — it’s not for expanding an existing business or repaying old debt.

Loan amounts range from ₹10 lakh to ₹1 crore, with repayment tenure of up to 7 years including a moratorium period. You need to hold at least 51% ownership if it’s a partnership, be 18 or older, and have no history of defaulting on an institutional loan. Every bank branch is mandated to support at least one SC/ST and one woman borrower under this scheme every year, so if you fit the eligibility, don’t hesitate to ask your branch directly.

So Which One Should You Apply For?

As a rough rule: if your project needs under ₹10 lakh and you want the fastest, most flexible option, start with Mudra. If your project is bigger and you qualify as a new unit, PMEGP’s subsidy makes it the most cost-effective route — you’re not just borrowing, you’re getting part of it free. If you’re a woman or SC/ST entrepreneur with a larger greenfield project (₹10 lakh+), Stand-Up India is built for exactly that.

It’s also worth knowing these aren’t always mutually exclusive with private funding — many entrepreneurs combine a government scheme loan with personal savings or a small private loan to close the gap. Whichever route you choose, apply with a genuinely well-prepared project report; that document affects your approval odds more than almost anything else.

Frequently Asked Questions

Can I apply for both PMEGP and Mudra loan for the same business?

No — these schemes are meant to fund a project once through one route. You choose the scheme that best matches your project size and category, rather than applying to more than one for the same business.

Is collateral required for these government scheme loans?

Mudra loans are collateral-free up to their full limit under the Credit Guarantee Fund. PMEGP and Stand-Up India typically don’t require collateral either for loans within the standard limits set by the relevant bank guidelines, though banks may ask for a personal guarantee.

How long does approval usually take?

Mudra loans are the fastest, often 7–15 working days once documents are complete. PMEGP and Stand-Up India involve project appraisal and, for PMEGP, mandatory training before disbursal, so they typically take several weeks longer.