Seed Money Scheme (SMS)
Seed Money Scheme (SMS)
Seed Money Scheme (SMS) is a scheme that is part of the Prime Minister’s Employment Generation Programme (PMEGP). The scheme implemented in Maharashtra, influences and motivates unemployed youth to take up self-employment as their earning source. SMS provides soft loans to unemployed individuals so that they can share the expenses and have an excellent start to their business. The repayment policies are very affordable and does not become a burden for them at the time of repayment. The main administrating body is the same as it is in PMEGP. The scheme is for both rural and urban individuals. The article discusses in detail about the Seed Money Scheme.
Objective of the Scheme
The aim of the scheme is to encourage the unemployed individual to take up self-employment ventures through service, industry and business, by providing soft loans to meet a part of the margin money to avail institutional finance.
Features of the Scheme
The highlights of the Seed Money Scheme are as follows.
- The scheme grants funds for a project that costs up to Rs. 25 lakhs for industry, service and business activity.
- Seed Money grants 15 per cent of assistance for project cost that is approved by financial institutions. Those projects that are costing up to Rs. 10 lakhs, the quantum of assistance ranges up to 15 per cent for General category and 20% for SC/ ST and NT/ OBC/ VT/ handicapped upto 20 per cent.
- A seed money component up to Rs. 3.75 lakhs is provided by the scheme.
- Through this scheme, a bank loan of 75% of the project cost is offered.
- The rate of interest on seed money is 6%, and if the borrower pays the repayment at regular intervals within the scheduled time, then the borrower gets a rebate of 3% in interest. Therefore, he has to pay only 3% interest.
- If the instalment is not repaid in time, it attracts 1% penal interest.
- The repayment of the loan begins after three years in four yearly instalments for industry cases. In other cases, repayment begins only after six months availing the loan.
The following eligibility standards have to be passed to become beneficiaries of the scheme.
- The individual has to be between 18 to 50 years of age.
- The individual should have passed Standard VIII.
- The individual has to be citizens of the state for at least 15 years.
- The individual has to be unemployed.
Benefits of the Scheme
The benefits of the scheme are mentioned below.
The project cost of Rs. 25 Lakhs: Projects that fall under business, service and industry are covered under the scheme.
15% assistance of total project cost: For the open category, 15% of total project expense is offered by the Government.
20% for reserved category: Categories coming under special reservations namely SC/ ST/ OBC/ VJNT/ SBC/ Physically Disabled are offered 20% of the assistance.
A bank loan of 75% of total project cost: Loan of 75% of the entire project cost is given by banks.
Meagre Rate of Interest: There is a rate of interest of 6% on seed money and if the loan repayment is made in time and regularly, the rate is reduced to 3%.
Three years of moratorium period: The loan repayment instalments begins only after three years.
Here are the mandatory documents that have to be possessed by the applicants.
- Caste Certificate
- Educational Marksheets
- Birth Certificate
- Bank Passbook
- Residential Certificate
The scheme is implemented only at a ground level. After a complete survey by KVIC and other organisations, the application form can be availed from the following government bodies.
- Nationalise banks
- Khadi and Village Industries Commission
- Khadi and Village Industries Boards
- District Industries Centers
- Gram Panchayat
- Nagar Palikas
- The charitable trust that is active in the concerned area