+91 75488 91839
info@sunpazsupport.com
Sunpaz Consulting
HomeBlogsPMEGP vs Mudra vs CGTMSE
Business Loan2025

PMEGP vs Mudra vs CGTMSE: Which MSME Funding Scheme Is Best?

A simple comparison of PMEGP, Mudra, and CGTMSE for entrepreneurs in 2025

Updated: November 2025
12 min read
17,834 views

₹50Cr+

Funding Secured

500+

Startups Helped

98%

Success Rate

7-14 Days

Fast Processing

Introduction

For small businesses and first-time entrepreneurs in India, choosing the right government scheme is one of the most important decisions when planning to start or expand a business. In 2025, three of the most popular MSME funding schemes are PMEGP, Mudra, and CGTMSE.

Each scheme serves a different purpose, offers different benefits, and targets different types of entrepreneurs.

This blog provides a clear, simplified comparison of PMEGP vs Mudra vs CGTMSE, helping you understand which scheme may be suitable for your business needs in 2025.

Related Articles

Funding

How to Get Funding for Business in India

8 min read
Funding & Schemes

Government Schemes for Startups in India

12 min read
MSME Loan Docs

What Documents Are Required for MSME Loan in 2025? (Complete Guide for Small Businesses)

12 min read

1. What Are These Three Schemes? (Quick Overview)

Before comparing them, let’s understand the basics of the three most popular MSME funding schemes in 2025.

PMEGP (Prime Minister’s Employment Generation Programme)

Subsidy-based scheme promoting new micro-enterprises
Offers subsidy on project cost
Ideal for NEW businesses
Available only for manufacturing and service units

Mudra Loan (Under PMMY)

Collateral-free loan for small business activities
No subsidy offered
Covers income-generating activities
Categories: Shishu, Kishor, Tarun

CGTMSE (Credit Guarantee Fund Trust for Micro & Small Enterprises)

Provides credit guarantee for collateral-free MSME loans
Not a direct loan scheme
Guarantee cover encourages banks to offer unsecured loans
Ideal for new or established MSMEs needing higher loan amounts

2. PMEGP vs Mudra vs CGTMSE: Detailed Comparison 2025

Below is a simple and comprehensive comparison to help you choose better.

1. Loan / Funding Type

  • PMEGP: Subsidy on project cost for new units
  • Mudra: Collateral-free small business loan
  • CGTMSE: Guarantee cover for collateral-free MSME loans up to higher limits

2. Loan Amount (2025)

  • PMEGP: Up to ₹50 lakh (manufacturing), ₹20 lakh (service)
  • Mudra: Up to ₹10 lakh
  • CGTMSE: Banks can lend up to ₹2 crore (or more depending on category)

3. Collateral Requirement

  • PMEGP: Not required
  • Mudra: Not required
  • CGTMSE: No collateral required (bank receives guarantee cover)

4. Subsidy Availability

  • PMEGP: Yes (15%–35% depending on category)
  • Mudra: No
  • CGTMSE: No direct subsidy (only guarantee cover)

5. Who Should Apply? (Ideal Category)

PMEGP – Best for:

  • First-time entrepreneurs
  • Rural and urban youth
  • Micro manufacturing and service units
  • Businesses requiring subsidy support

Mudra – Best for:

  • Small traders
  • Shop owners
  • Self-employed individuals
  • Home-based businesses
  • Early-stage micro-businesses

CGTMSE – Best for:

  • MSMEs needing higher loan amounts
  • Growing businesses
  • SMEs with strong business plans
  • Units needing term loans or working capital

6. Eligibility Comparison

PMEGP:

  • Must start a NEW business
  • Minimum 18 years+ age
  • No subsidy for existing units

Mudra:

  • Any small business can apply
  • No age limit beyond standard banking norms
  • No subsidy

CGTMSE:

  • New or existing MSMEs
  • Manufacturing and service sectors eligible
  • Banks evaluate eligibility based on financials

7. Key Benefits (2025 Perspective)

PMEGP:

  • Subsidy can reduce repayment burden
  • Ideal for new entrepreneurs
  • Strong support for rural and small-town businesses

Mudra:

  • Easy documentation
  • No collateral
  • Suitable for small-ticket requirements

CGTMSE:

  • Allows higher loan amounts without collateral
  • Helps growing businesses get funding
  • Works for both new and existing MSMEs

3. Which Is Better: PMEGP or Mudra or CGTMSE? (2025 Summary)

Here is the final comparison to help you decide:

Choose PMEGP if:

  • You are starting a brand-new micro business
  • You want a subsidy on your project cost
  • Your business falls under manufacturing or service activities

Choose Mudra if:

  • You need a small collateral-free loan
  • Your activity is small-scale (trading, services, self-employment)
  • You want quick funds without subsidy

Choose CGTMSE if:

  • You need a higher loan amount without collateral
  • You have a running MSME or a well-planned new business
  • You want term loans or working capital for expansion

4. PMEGP vs Mudra vs CGTMSE: Final Recommendation (2025)

There is no single “best” scheme, because each scheme supports a different category of businesses:

PMEGP

Best for new entrepreneurs who want subsidy-based support

Mudra

Best for very small businesses needing quick loans up to ₹10 lakh

CGTMSE

Best for MSMEs requiring higher collateral-free loans for growth

Your ideal scheme depends on your loan amount, business stage, and requirement in 2025.

5. Frequently Asked Questions

PMEGP is best for new businesses needing subsidy, Mudra is best for small loans up to ₹10 lakh, and CGTMSE is ideal for higher collateral-free MSME loans.
Yes, PMEGP offers a subsidy between 15% and 35% depending on category and location.
Yes. All Mudra loan categories — Shishu, Kishor, and Tarun — are completely collateral-free.
CGTMSE is not a loan. It provides guarantee cover to banks so they can offer collateral-free loans to MSMEs.
No. PMEGP is only for NEW units. Existing businesses cannot apply under the subsidy.

Conclusion

In 2025, PMEGP, Mudra, and CGTMSE continue to be three of the most important government-supported MSME funding options in India. Each scheme targets a different category of entrepreneurs, from new startup owners to growing MSMEs. Understanding their differences helps you choose the right funding scheme for your business goals.

• If you need subsidy: choose PMEGP.

• If you want a small, quick, collateral-free loan: choose Mudra.

• If you want a high-value, collateral-free MSME loan: choose CGTMSE.

This comparison ensures you make an informed decision and select the scheme that fits your requirement in 2025.

SC

Sunpaz Consulting Team

Expert business consultants specializing in government schemes, MSME funding, and startup registration

10+ Years Experience
500+ Businesses Helped
98% Success Rate

Ready to Access Government Funding?

Let our experts guide you through the application process and help you secure the funding your business deserves

Call Now
Free Consultation
Expert Guidance
Fast Processing

Call Us

+91 91577 82961

Email Us

info@sunpazsupport.com

Visit Office

Coimbatore, Tamil Nadu

PMEGP vs Mudra vs CGTMSE (2025): Best MSME Loan Scheme Comparison | Sunpaz Support | Sunpaz Consulting