Everything you need to know about the Prime Minister Youth Business Loan Scheme

By Ali Arshad on
December 4, 2015
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We’ve all heard some whispers about our Prime Minister’s endeavors in the youth sector. While the initiative of distributing laptops all over Pakistan being the most popular, that is not all our Prime Minister has to offer.

Another sister branch of the same youth program is the Youth Business Loan Scheme, a scheme to bring progress and establish businesses in our nation. Don’t worry if you don’t know of all that entails this scheme, following is your complete guide to all you need to know about the Youth Business Loan Scheme.

What is the Youth Business Loan Scheme?

This Scheme is focused for the youth who wish to start a business and launch their enterprise. Whether it’s small scale like starting your own catering service or large scale that is expanding your catering service to turn them into a catering company with a lot of appointed personnel, this Youth Business Loan Scheme is to aid you and financially assist your business. This scheme is beneficial for the youth of our entire nation. Those of you, who are un-employed or wish to be self-employed; this scheme helps you in almost every aspect of your situation. Relieving you of your financial commitments, the Youth Business Loan Scheme is not only efficient but effective in producing better business startups too.

The youth eligible for this loan scheme are those who are citizen of Pakistan (of course), have CNIC, and are between the ages of 21 to 45. All businesses, existing or new are eligible for requesting a loan under the scheme.

50% of loan is allocated for Women Borrowers

In order to rid the system of any possible segregation, the scheme also clearly states that around fifty percent of the allocated money for the loans will be focused on women borrowers. While this may be pleasing to hear for some of you, this, however, raises one major concern as has been previously addressed by a few of us.

Instead of allocating the loans to men and women equally, the scheme should however focus on allocating the loans to the right and rather more productive initiatives and not on the basis of an initiative or business plan coming from a woman or man.

Allocating funds on the basis of substantive business ideas not only helps save a lot of time and energy of the youth but also allows them to seek counsel. Which can help adopt a better entrepreneurial approach according to the market-system approach in our nation and will help our government assure that the businesses they are lending money will be returned along with gaining promising work as a by-product.

How Does The Scheme Work?

The Scheme offers each individual with a business plan, a concessionary loan up to 20 million with an 6% mark-up per annum and with monthly installments depending on the size of loan you have requested. In order to receive a loan a personal guarantee i.e. immoveable property is required. There is no fee attached to register oneself for the scheme or for the application form however one may have to pay some fee as the processing charges to the executing banks at the time of submission for the scheme. The loan has to be repaid within 8 years while the repayment of the first installment will be due after the first year of the loan’s disposal. However, you can also make balloon payments if you wish.

In addition, to this a guarantor is also required for being eligible to demand a loan. The requirement for a guarantor include for him/her to be a government employee of BPS 16 and above or any individual with a net worth 1.5 times of the loan that is required. More than one individual with a total of such a net worth can be guarantors too (but not more than 3). Other than that the applicant him/herself can also be guarantors if hold such net worth. And yes, the guarantor can be a family/blood relative.

Role of SMEDA

Small and Medium Enterprises Development Authority (SMEDA) is taking control of standardizing the scheme and helping the individuals to decide what sector they wish to launch their business in. SMEDA has made available almost 50 pre-feasibility studies for various sectors such as food and minerals for the youth to get a better a picture of what a business proposal and draft looks like and what kind of funding one should be opting for according to their preferred sector.

While for some unique cases the pre-feasibility studies may not help but for many these studies are the perfect guideline to adopt for their own proposals. SMEDA has generated an excel-based calculator along with the studies to estimate your monthly installments but it does not include other charges such as bank fee and is just to give one an idea.

SMEDA is also collaborating with Punjab Information Technology Board for this scheme to make sure that the loans and this initiative is also being offered to those who participate in the Technology Board’s survey.

SMEDA and the executing banks have also been directed to put in place system of periodic guidance to the entrepreneurs in running their businesses successfully.

What is the loan application procedure?

Alright so last but not the least. The application registering is fairly simple and involves quite a few steps. You need to find the executing/participating banks in the scheme which you can easily find online but for your sake, here’s the list that is taken directory from Prime Minister’s Office webpage;

  • National Bank of Pakistan
  • First Women Bank Limited
  • Habib Bank Limited
  • Habib Metropolitan Bank
  • Bank Al-Habib
  • Sindh Bank
  • Summit Bank
  • Soneri Bank
  • Meezan Bank
  • Al Baraka Bank
  • Dubai Islamic Bank
  • Allied bank Limited
  • Muslim Commercial Bank
  • JS Bank
  • United Bank Limited
  • Askari Bank

Once you’ve figured out which back you want to apply through, you simply need to visit the designated branch for that bank and get a hardcopy for the loan application or you can simply download the form online from SMEDA or PMO’s website online.

Once done filling the form, you’ll have to submit the form. There are no deadlines to this loan – you can apply for the loan any time of the year once the scheme has been initiated. After submission a front end screening takes place. Once your form has been accepted, a verification will take place first at desktop followed by a telephone and lastly a physical face-to-face verification. Afterwards a slight branch assessment will take place which will lead to the credit approval and once that’s done it indicates that, your loan has been granted. And the bank only takes up to 15 days to process your request for the loan.

If your loan is accepted, you’ll be contacted by your bank via any means of communication and you may also receive an SMS text on your phone by PMYouthProg or 80028. You must not rely upon confirmation from any other number!

That being said, here’s all you need to know about the Prime Minister’s Youth Business Loan Scheme. It is a great initiative that helps to promise a future for our youth and thus must be encouraged. If you or anyone you may know who can advantage from this scheme, you must consult with one of the participating banks and discuss the further financial prospects of the scheme.

I am here to answer your queries. Please leave a comment, if you have any questions.

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