How to Apply for the PM Youth Loan Scheme – A Detailed Guide (2024)

Are you thinking about starting your own business? The PM Youth Loan Scheme could be what you’re looking for. This program gives young people like you the opportunity to bring your business ideas to life. By focusing on giving power to the youth, this initiative has changed the game for many up-and-coming business owners throughout the country.

Applying for the PM Youth Loan Scheme is easy, but you need to know what’s what before you start. This guide will show you how to apply, tell you what’s great about the loan program, and give you some pointers to up your odds of getting approved. We’ll also talk about how to manage your money once you get the loan, so you can make your business grow.

What’s the PM Youth Loan Scheme all about?

The PM Youth Loan Scheme aims to give young Pakistani entrepreneurs a leg up. To get the most out of this chance, you should know its main points.

Who can apply?

To apply for the PM Youth Loan Scheme, you need to meet these requirements:

• You must be a Pakistani citizen with a valid CNIC.
• Your age must fall between 21 and 45 years.
• For IT and E-Commerce businesses, the age limit starts at 18 years.
• If you apply as a partnership or company at least one owner partner, or director needs to be within the specified age range.
• Small and Medium Enterprises (SMEs) run by youth within these age limits can also apply.

For agricultural loans, the State Bank of Pakistan’s “Indicative Credit Limits & Eligible Items for Agriculture Financing 2020” determines the classification.

Loan Tiers and Amounts

The scheme gives out loans in three levels:

1. Tier-1 (T1): Up to Rs 500,000
2. Tier-2 (T2): Above Rs 500,000 to Rs 1,500,000
3. Tier-3 (T3): Above Rs 1,500,000 to Rs 7,500,000

Each level comes with its own rules:

• T1 loans don’t charge interest.
• T2 loans have a 5% markup rate.
• T3 loans have a 7% markup rate.

Types of Loans Available

This scheme lets you apply for different kinds of loans:

1. Long-term loans
2. Working capital loans
3. Murabaha financing
4. Leasing for made vehicles for business use
5. Farm loans (both production and development)

Things to keep in mind:

• T1 loans come with a maximum payback time of 3 years split into equal monthly payments.
• Loans in T2 and T3 categories allow you to repay for up to 8 years, and this includes a grace period lasting up to one year.
• If you get a working capital loan under T2 or T3, you have up to 5 years to pay it back.
• You’re allowed to spend up to 65% of your total financing limit on construction work.
• When it comes to agricultural loans, your repayment schedule matches the crop cycle, but it won’t last longer than 1 year.

The PM Youth Loan Scheme intends to give money to people within 45 days after they apply making it easy for young business owners like you to get. If you want to start a new company or grow one you already have, this plan has many ways to fund your business needs.

Step-by-Step Application Process

To ask for a PM Youth Loan in 2024, you need to follow some simple steps. Here’s a full guide to help you through the process:

Setting Up an Account on PMYP Portal

1. Go to the PM Youth Program (PMYP) website.
2. Find where to sign up for an account.
3. Make sure you have a cell phone number in your name. You’ll need this to register.
4. Give the info they ask for to finish signing up.

Filling Out the Online Application Form

After you’ve made your account, you can start your application:

1. Sign in to your PMYP account.
2. Find and select the Youth Loan Program 2024 application form.
3. Make sure you have 15 minutes to fill out the form .
4. You’ll need to enter this information:
   • Your National Tax Number
   • The Consumer ID from your home electricity bill
   • The Consumer ID from your work electricity bill (if you have one)
   • Any vehicle registration numbers in your name (if you own a vehicle)
   • Names, CNICs, and phone numbers of two people who can vouch for you (not family members)
   • For new businesses: Your best guess at monthly business income, costs, household expenses, and any other money you make

• Real monthly income from the business costs, home expenses, and other sources of money (for businesses that are already running)

5. If you need extra time, you can save what you’ve done so far and come back to it later.

Submitting Required Documents

To finish your application, you need to upload these documents:

1. Passport-sized photograph
2. CNIC (front and back)
3. Your most recent educational degree/certificate (if it applies to you)
4. Experience certificate(s) (if you have any)
5. License/Registration with Chamber or Trade Body (if it applies to you)
6. Recommendation Letter from your chamber/trade body or Union (if it applies to you)
7. Extra financial documents (you don’t have to, but we suggest you do):
   • Financial Statements
   • Business Feasibility Report
   • Bank statements from the last 6 months

Once you send in your application:

1. You’ll spot an application registration number on the screen.
2. You’ll get an SMS to confirm your submission.
3. As your application moves forward, you’ll get SMS updates.
4. You can look up your application status on the official website using your registration number.

Keep in mind, the more info you give the better your application will be. Take your time to collect all needed documents and fill out the form . This care can really boost your chances of getting the loan. The PM Youth Loan Scheme aims to process applications within 45 days so be patient and keep track of your application status.

Key Features of the Loan Program

The PM Youth Loan Scheme has features to help young entrepreneurs like you. Knowing these key points will allow you to get the most out of this chance.

Interest Rates and Repayment Terms

The loan program has three tiers. Each tier comes with its own interest rates and repayment terms:

1. Tier-1 (T1): Loans up to Rs 0.5 million
   • No interest
   • You pay back in 3 years or less
   • Monthly payments are the same
2. Tier-2 (T2): Loans from Rs 0.5 million to Rs 1.5 million
   • 5% interest rate
   • You can pay back in up to 8 years, with a possible 1-year break at the start
3. Tier-3 (T3): Loans from Rs 1.5 million to Rs 7.5 million
   • 7% interest rate
   • You can pay back in up to 8 years, with a possible 1-year break at the start

For working capital loans and murabaha financing under T2 and T3, you can repay for up to 5 years. Banks might give you a choice to pay just the markup for the first two years. After that, you’d pay both principal and markup over the next three years.

When it comes to agricultural loans, the payback links to the crop cycle. These loans have a maximum length of 1 year. You need to repay the whole amount in one go on or before the due date.

Debt-Equity Ratio Requirements

The debt-equity ratio changes based on whether you’re launching a new venture or growing an existing business:

For new businesses:

• T1 loans: 90:10 debt-equity ratio
• T2 and T3 loans: 80:20 debt-equity ratio

For existing businesses:

• All tiers have no debt-equity ratio requirement

You must add your equity share after your loan gets the green light. You can make this contribution through cash or immovable property.

Security and Collateral Conditions

Each tier has different security requirements:

1. T1 and T2 loans: These are clean loans. They need just your personal guarantee to secure them.
2. T3 loans: The executing bank’s credit policy decides what security you need.

For every tier when you buy a vehicle for business, the vehicle becomes collateral. Remember, you can finance one vehicle per borrower. But if you run a food franchise or distribution business, you might get to finance more than one vehicle.

Keep these extra points in mind:

• You’re allowed to spend up to 65% of your total financing limit on civil works.
• The program has different loan options, including term loans working capital loans, murabaha financing, and leasing for made vehicles for business use.
• When it comes to agricultural loans, you can apply for both production and development loans.

These features make the PM Youth Loan Scheme a flexible and easy-to-access choice for young business owners like you. By getting a grip on these key points, you can plan your loan application better and use the money to expand your business.

Tips to Apply for a Loan Successfully

To improve your odds of getting a loan through the PM Youth Loan Scheme, you need to take a smart approach to the application process. Here are some important tips to help you succeed:

Preparing a Solid Business Plan

A well-crafted business plan has an impact on your loan application. When you create your plan, think about these key parts:

1. Product or Service: Define what you’re selling .
2. Market Analysis: Show you know your target market well.
3. Technical Factors: Describe how your business will run.
4. Infrastructure: Outline your physical and organizational setup.
5. Financial Analysis: Give a detailed budget and money projections.
6. Compliance: Explain how you’ll meet human rights and environmental rules.

Your business plan should include a full market analysis and financial breakdown. The money section should cover:

• Expected costs and expenses
• Forecast income
• Resources needed (money, staff, training, equipment)
• Possible funding options

Keep in mind, a good business plan doesn’t just help your loan application. It also guides your business to success.

Getting Your Documents Ready

To speed up your application, gather these key documents:

1. Valid CNIC (front and back)
2. Passport-sized photos
3. Education certificates and degrees
4. Evidence of relevant experience or technical skills (if needed)
5. Business plan or feasibility study
6. Proof of equity or collateral (based on loan tier needs)
7. Bank account information

The bank or PMYP might ask for more papers so be ready to give extra details if they need them.

Keeping Tabs on Your Application

Once you’ve sent in your application, stay on top of things:

1. Write down the application number you see on the screen.
2. Watch for text messages that confirm and update you.
3. Often check how your application is doing on the main website using your number.
4. Don’t worry if it takes a while – it can be up to a month from when you apply.

To see how your application is going online:

1. Go to the PMYP website (https://pmyp.gov.pk/).
2. Find the “Track Your Status” button.
3. Type in your CNIC number and other needed info.

Keep in mind, you should get a response within 30 days after you apply. If you don’t hear anything by then, reach out to the people in charge.

These steps and staying on top of things while you apply will boost your odds of getting a loan through the PM Youth Loan Scheme. This chance could change everything for your business plans, so give it your all and make a strong case for your idea.

Financial Planning for Your Loan

Getting to Know Interest Rates and Loan Terms

When you’re thinking about applying for the PM Youth Loan Scheme, you need to understand the interest rates and loan terms for different loan tiers. The scheme has three tiers each with its own conditions:

1. Tier-1 (T1): Loans up to Rs 0.5 million
   • No interest
   • You pay back in 3 years or less
   • Monthly payments stay the same
2. Tier-2 (T2): Loans from Rs 0.5 million to Rs 1.5 million
   • 5% markup rate
   • You can pay back in up to 8 years, with a possible 1-year break at the start
3. Tier-3 (T3): Loans from Rs 1.5 million to Rs 7.5 million
   • 7% markup rate
   • You can pay back in up to 8 years, with a possible 1-year break at the start

When it comes to working capital loans and murabaha financing under T2 and T3, you can pay back over a period of up to 5 years. Some banks might give you a choice to pay just the markup for the first two years. After that, you’d pay both the main amount and markup over the next three years.

How to Figure Out Loan Payments

To manage your money well, you need to know how much you’ll pay for your loan. Here’s what you can do to work it out:

1. Check out a Personal Loan Calculator: This handy tool shows you what you’ll pay each month and how much the loan will cost you in total.
2. Don’t forget about extra costs: Most personal loans come with fees or insurance, which can make the final price higher than what’s advertised. The calculator takes these extras into account to figure out the true annual percentage rate (APR) for the loan.
3. Look at APRs side by side: To get a more accurate picture, compare loans using their APRs. This number includes all the costs tied to the loan.
4. Keep an eye out for fees: Watch for possible charges like:

• Origination fee: runs from 1% to 5% of what you borrow
• Prepayment fee: Kicks in if you clear your loan or make payments before they’re due
• Late payment fee: You’ll get hit with this if you don’t pay on time

Ways to Meet Equity Requirements

The PM Youth Loan Scheme has certain equity rules you must follow. Here are some ideas to help you plan:

1. Know the Debt-Equity Ratio:
   • For new businesses:
     • T1 loans: 90:10 debt-equity ratio
     • T2 and T3 loans: 80:20 debt-equity ratio
   • For existing businesses: No debt-equity ratio requirement for all tiers
2. Get Your Equity Contribution Ready: You need to put in your equity share once your loan gets the green light. This contribution can take the form of cash or immovable property.
3. Think Ahead: Begin to save or spot potential assets that can work as your equity contribution well before you apply for the loan.
4. Think About Collateral: T3 loans need security based on the bank’s credit rules. When you finance a vehicle for business, the vehicle becomes the collateral.
5. Look Into Other Funding Options: If you find it hard to meet the equity needs, think about using other money sources like your savings, loans from family, or teaming up with partners.

By getting a handle on these main parts of financial planning for your PM Youth Loan, you’ll be in a better spot to tackle the application process and make sure you’re all set to meet the requirements. Keep in mind thorough planning and knowing what you’re on the hook for will give you a leg up as you start your business journey.

FAQs

1. What’s The Maximum Amount of Loan I Can Get From Pm Youth Loan Scheme?
You can Get the loan up to 7.5 Million PKR which is the maximum amount.

2. Is Pm Youth Loan Scheme Is Available In All Pakistan?
Yes the Pm Youth Loan Scheme is available all over Pakistan in every city. You can get guidelines and information from the SMEDA which stands for (Small and Medium Enterprises Development Authority) in your city.

3. What’s the age requirmeent for the Pm Youth Loan Scheme?
Pakistani citizens between 21 and 45 years old with the potential to start a business can apply for the loan. For businesses related to IT or E-Commerce, people as young as 18 can apply.

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