Thousands of entrepreneurs apply for PMEGP loan every year — full of hope, business dreams and startup excitement.
But many applications get rejected…
not because the applicants are incapable…
…but because small mistakes slip through unnoticed.
Bankers, KVIC and DIC officers repeatedly say the same thing:
“Most PMEGP rejections could have been avoided with better preparation.”
In this post, let’s decode the real PMEGP loan rejection reasons — explained in simple language — along with practical fixes you can apply.
Based on scrutiny feedback, interview experiences and banker remarks — here are the most frequent causes of rejection.
Many applications fail before even reaching the bank because…
…the applicant doesn’t fully meet PMEGP eligibility conditions.
Common PMEGP Loan Rejection Reasons
include:
These are small details — but they matter.
👉 Add a short self-declaration — it strengthens credibility.
Banks don’t reject applications randomly.
They reject when the project looks:
Typical viability-related rejection reasons:
To a banker — this signals risk.
👉 A simple break-even & cash-flow table dramatically improves approval odds.
Many strong ideas fail…
…just because documents are incomplete or mismatched.
Common mistakes:
Officers do not have time to chase applicants for corrections.
👉 Upload clear scans — blurred images often lead to instant rejection.
Sometimes the project is good…
…but the financial history creates doubt.
Banks reject applications due to:
From the banker’s perspective — repayment risk increases.
👉 Avoid applying immediately after a loan settlement — wait & rebuild your profile.
you may also like to read: Understanding the Importance of CIBIL Score in Today’s Financial World
Some applications fail simply because the applicant:
These are avoidable — but very common.
👉 Keep your phone reachable & email notifications ON.
Before submitting your application — ensure:
✔ Eligibility confirmed
✔ DPR realistic & bankable
✔ Valid quotations attached
✔ Banking history clean
✔ Proof of skills / experience added
✔ Same name across all documents
✔ Regular follow-up maintained
Small corrections → big difference in approval chances.
Banks tend to approve projects that:
It’s not about applying for a big project…
…it’s about applying for a sustainable project.
Banks usually reject PMEGP loans due to incomplete documents, low credit score, poor project viability, insufficient margin money, or past loan defaults. Always confirm the exact reason before reapplying.
A rejection is not final. You can correct errors, improve your project report, strengthen your credit profile, and apply again or approach another bank.
Yes. There is no restriction on reapplying. However, fix the issues that caused rejection—such as documentation or financial planning—to improve approval chances.
There is no officially fixed score, but a CIBIL score above 700 is generally preferred by banks to consider you a low-risk borrower.
Typically, approval can take 15 to 45 days, depending on document verification, project evaluation, and bank processing speed.
No. Even though PMEGP is a government-backed scheme, banks conduct their own risk assessment. Only financially viable projects with eligible applicants get approved.
Yes. Banks have the authority to reject applications if they find repayment risk, eligibility issues, or weak business plans.
Tabrez writes about MSME schemes, entrepreneurship opportunities, and government programme insights — simplifying complex policy information for first-time business owners in India.
This article is for informational and educational purposes only. PMEGP rules, eligibility conditions and banking procedures may change based on official notifications and institutional policies. Some parts of this content were drafted with the assistance of AI tools such as ChatGPT for structuring and clarity. Readers are advised to verify details from official PMEGP / KVIC sources and consult authorised agencies or banks before making financial decisions.
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