Learn everything about the PM Youth Business Loan Scheme in Pakistan. Get details on eligibility, loan amount, interest rate, application process, and benefits. Apply now and start your own business with government support.
the Government of Pakistan introduced the Prime Minister’s Youth Business Loan Program (PMYBL) to support aspiring entrepreneurs and small business owners.
Launched during the fiscal year 2013-14 with an initial allocation of Rs. 5 billion, this program aims to provide interest-subsidized loans to young men and women across Pakistan. This article explores the key features, eligibility criteria, benefits, and long-term impact of the PM Youth Loan Scheme.
Table of Contents
What is the PM Youth Business Loan Program?
The PM Youth Business Loan Program is a flagship initiative of the Government of Pakistan aimed at empowering the youth by enabling them to establish or expand their small businesses. The program targets unemployed or underemployed youth, especially those with educational backgrounds and entrepreneurial potential, by providing access to low-cost financing.
With a loan size of up to Rs. 2 million (20 lacs) and a fixed interest rate of 8%, the program encourages youth to turn their ideas into viable business ventures. Additionally, the scheme mandates that 50% of loans be awarded to women, promoting gender equality and female entrepreneurship.
Objectives of the PM Youth Business Loan Scheme
The primary goals of the PM Youth Business Loan program include:
- Promoting entrepreneurship among youth
- Reducing unemployment by enabling self-employment
- Facilitating access to finance for aspiring business owners
- Encouraging women’s participation in economic activities
- Boosting SME growth across multiple sectors
- Promoting equitable development across urban and rural areas
Key Features of the PM Youth Business Loan Program
Here is a detailed breakdown of the program’s features:
1. Loan Amount
Applicants can avail of loans of up to Rs. 2,000,000 (Twenty Lacs) to start or expand a business.
2. Eligibility Criteria
- Applicants must be between 21 and 45 years old
- Must hold a valid CNIC (Computerized National Identity Card)
- Must demonstrate entrepreneurial potential
- Applications are submitted through designated bank branches, mapped with the applicant’s area of residence or business.
3. Loan Tenure
The maximum loan period is 8 years, which includes a grace period of 1 year. This allows the borrower ample time to establish and stabilize the business before starting repayments.
4. Interest Rate
- The borrower pays a fixed rate of 8%
- The Government of Pakistan subsidizes the remaining amount, which includes the difference between KIBOR + 500 basis points
5. Debt-to-Equity Ratio
- The borrower contributes 10% of the total loan amount as equity.
- This contribution can be in the form of cash or immovable property.
- Equity is required only after loan approval.
6. Loan Security
- The borrower must provide one guarantor.
- Business hypothecation is the primary form of permissible collateral.
7. Special Focus on Women
- 50% of the loans under the program are reserved for female applicants.
- This ensures inclusive economic participation and support for women-led businesses.
8. Number of Loans
- An estimated 100,000 loans are to be distributed across Pakistan in the first phase.
Participating Institutions
The loan scheme is implemented with the collaboration of the following entities:
Executing Agencies
- National Bank of Pakistan (NBP)
- First Women Bank Limited (FWBL)
These banks are responsible for processing, approving, and disbursing the loans under the guidance of the State Bank of Pakistan (SBP).
Role of SBP
- Ensures regulatory compliance
- Encourages private banks to participate based on the merit of business proposals
- Provides training and support to banks for implementation
- Publishes quarterly reports for transparency
Role of SMEDA (Small and Medium Enterprises Development Authority)
SMEDA plays a crucial role in facilitating and supporting applicants:
- Development of business feasibility studies (50+ pre-designed templates available)
- Ensures these feasibilities are publicly accessible through websites
- Collaborates with the Punjab Information Technology Board (PITB) to enhance outreach
- Offers guidance and advisory services for entrepreneurs
These pre-feasibility reports help applicants create well-structured and bankable business plans, increasing their chances of approval.
Application Process: How to Apply
Step 1: Obtain the Application Form
- Available at designated bank branches (NBP, FWBL)
- Also accessible through official bank websites
- The form is provided in both English and Urdu
Step 2: Fill Out the Form
- Provide personal, educational, and business information
- Keep the format simple and accurate
- Attach required documents including:
- CNIC copy
- Business proposal or plan
- Passport-sized photographs
- Guarantor information
Step 3: Pay Processing Fee
- A non-refundable fee of Rs. 100 is charged
Step 4: Submit the Application
- Submit at the nearest designated branch
- Non-designated branches can receive and forward applications
Step 5: Approval & Disbursement
- Processing time is capped at 15 working days
- Upon approval, the borrower is required to submit 10% equity
- Loan is then disbursed by the bank
Monitoring and Transparency
To ensure proper implementation and transparency:
- SBP publishes consolidated data quarterly
- An effective Complaints Cell has been established for redressal
- The Ministry of IT’s e-Government Directorate supports digital implementation and accessibility
Geographical Outreach
- The scheme is available nationwide, including all provinces and territories.
- Special provisions are made for Baluchistan, where at least one NBP branch per division is designated.
- All bank branches, whether designated or not, assist in distributing and forwarding application forms.
Target Sectors and Business Types
The PMYBL program covers all business sectors, including but not limited to:
- Retail and wholesale
- Agriculture and agribusiness
- Manufacturing
- Food and beverages
- IT and tech startups
- Women-focused small enterprises
Applicants can choose from standardized projects by SMEDA or propose original business plans.
Benefits of the PM Youth Business Loan Scheme
1. Financial Independence for Youth
Empowers young people to start their own ventures, reducing dependence on jobs and increasing income generation.
2. Boosts Employment
As new businesses grow, they generate employment opportunities for others, leading to overall economic growth.
3. Encourages Innovation
Startups and SMEs bring new ideas and solutions, contributing to the innovation ecosystem.
4. Promotes Gender Equality
By allocating 50% of loans to women, the scheme actively works to reduce the gender gap in entrepreneurship.
5. Support for Rural Areas
With nationwide accessibility, youth from rural and underserved areas can participate, ensuring inclusive development.
Challenges and Recommendations
While the PMYBL has shown promising results, challenges include:
- Lack of awareness in remote areas
- Difficulty in preparing business plans
- Limited outreach of supporting agencies like SMEDA
To address these, the government should:
- Enhance digital promotion and training programs
- Expand partnerships with private banks and NGOs
- Provide online tutorials and regional support centers
Conclusion
The PM Youth Business Loan Program is a strategic and transformative initiative designed to harness the entrepreneurial potential of Pakistan’s youth. With affordable financing, transparent processing, and a strong focus on women and underserved communities, the scheme offers a viable solution to unemployment and economic stagnation.
By equipping the youth with financial tools and business support, the PMYBL is not just a loan scheme—it is a catalyst for socio-economic change, fostering innovation, productivity, and self-reliance across the country.