CM-YUVA Uttar Pradesh: Interest-Free Loan for Young Entrepreneurs — Eligibility and Application

CM-YUVA (Mukhyamantri Yuva Udyami Vikas Abhiyan) is Uttar Pradesh's self-employment scheme for people aged 21 to 40. For a new micro unit with a project cost of up to ₹5 lakh, the State pays 100% of the bank-loan interest for four years, bears the CGTMSE guarantee cost and adds a margin-money subsidy of up to ₹50,000. You apply online on the Directorate of Industries portal, and the district unit sends your application to a bank.

Sources checked: 20 October 2026

Facts checked on 20 October 2026 against Government Order No. 49/2024/1650/477/18-2-2024 of 4 October 2024, the CM-YUVA brochure and the State MSME portal's scheme pages.

Key facts

Item	What the Government Order says
Notified	Government Order of 4 October 2024 (MSME Section-2)
Target	1 lakh new micro units a year; 10 lakh over 10 years
Age	21 to 40 years
Education	At least Class 8 pass; Intermediate or equivalent gets preference
Project size for the subsidy	Up to ₹5 lakh (industry or service)
Interest	100% interest subsidy for 4 years from financing, paid quarterly
Guarantee	State bears the CGTMSE cover cost for 4 years
Margin money	10% of project cost or of ₹5 lakh, whichever is less (at most ₹50,000)
Own contribution	15% general, 12.5% OBC, 10% SC/ST/divyang; 10% for everyone in Bundelkhand, Purvanchal and eight aspirational districts
Moratorium	6 months from the loan date
Second phase	50% interest for 3 years on up to twice the first loan or ₹7.5 lakh, whichever is less; only after repaying the first loan within 4 years
Apply at	msme.up.gov.in (Directorate of Industries portal)

Our CM-YUVA scheme page carries the same entry in the site's standard format.

Who is eligible for CM-YUVA?

Paragraph 2(3) of the Government Order sets five conditions:

1. Residence: you must be a resident of Uttar Pradesh. (The State MSME portal says "permanent resident".)
2. Age: 21 to 40 years.
3. Education: at least Class 8 pass. Applicants with Intermediate or an equivalent pass get preference.
4. Training or a skill qualification: trained under a government scheme such as the Vishwakarma Shram Samman Yojana, the ODOP Training and Toolkit scheme, the SC/ST/OBC training schemes or the UP Skill Development Mission, or holding a skill-related certificate course, diploma or degree from a recognised institution.
5. No earlier subsidy: you must not have received an interest subsidy or a capital subsidy under any other State or Central scheme. PM SVANidhi is the only exception.

The scheme covers manufacturing ("industry") and services. The order defines a service unit as one that is engaged in a service and is different from trading (buying goods and selling them as they are) and from manufacturing. The State MSME portal's scheme page says the scheme covers manufacturing, service and trade, so if your unit is a pure trading business, confirm with the District Industries Centre before you apply.

Some activities are excluded: tobacco, gutkha and pan masala; alcohol, aerated and carbonated drinks; firecrackers; plastic carry bags under 40 microns or of a thickness the government has prohibited; and anything else placed on the prohibited list.

What does CM-YUVA pay in the first phase?

The project. The subsidy is worked out on a project cost of up to ₹5 lakh. A project of ₹5 lakh to ₹10 lakh can be financed, but you must arrange the extra amount yourself and no subsidy is paid on it. The loan is a composite loan, and at least 10% of the project cost must be a term loan. Land and building purchase cannot be part of the project.

Your contribution. You deposit your own share up front:

Applicant	Own contribution
General category	15% of project cost
OBC	12.5%
SC, ST, divyang	10%
Anyone in Bundelkhand, Purvanchal, or Chitrakoot, Chandauli, Sonbhadra, Fatehpur, Balrampur, Siddharthnagar, Shravasti or Bahraich	10%

Interest. The State pays 100% of the interest on the loan for a project of up to ₹5 lakh, for four years from the date of financing, every quarter. Penal interest charged for a default or late instalment is not covered.

Guarantee. The loan is collateral-free, and the State bears the cost of the CGTMSE cover for four years. (Our CGTMSE guide explains how the guarantee works.)

Margin money. You get a subsidy of 10% of the project cost, or of ₹5 lakh, whichever is less, so the most is ₹50,000. It is bank-ended: it is adjusted in your loan account only after the unit has run for four years. If the project is not set up, or closes within four years, the margin money is taken back.

Moratorium. You get six months from the loan date before repayments start.

A worked illustration (arithmetic only): a general-category applicant in Lucknow plans a ₹4 lakh project. Own contribution 15% = ₹60,000; bank loan ₹3.4 lakh; the State pays the interest on that loan for four years. The margin-money subsidy is 10% of ₹4 lakh = ₹40,000, adjusted in the loan account after four years of running. The bank decides the actual sanction.

There is also a small extra: ₹1 for each digital transaction, up to ₹2,000 a year per unit.

What is the CM-YUVA second phase?

The second phase is for expanding the same business, and only for first-phase borrowers who repaid the principal (with any penal interest) within four years. Defaulters are not eligible.

• The second-phase project can cost up to ₹10 lakh.
• The State pays 50% of the interest for three years on a loan of up to twice the first loan or ₹7.5 lakh, whichever is less.
• No margin-money subsidy is paid in the second phase.
• At least 10% of the project cost must be a term loan; a workshop or work-shed can be included.
• A unit can expand to a project cost of up to ₹20 lakh, but the subsidy stays limited to 50% of the interest on ₹7.5 lakh for three years. You arrange the rest.
• The State bears the CGTMSE cost for three years.

The State MSME portal describes the second phase as "loans of ₹10 lakh to ₹20 lakh with a 50% interest subsidy for three years". The Government Order is the binding text: the subsidy is on the smaller of twice your first loan or ₹7.5 lakh.

How do I apply for CM-YUVA, step by step?

1. Prepare a project report. The Directorate's portal has a project-report help desk, and our free DPR Builder gives you a bank-format draft to start from.
2. Register on msme.up.gov.in (the Directorate of Industries portal) and choose CM-YUVA. Applications are accepted online only.
3. Upload your documents (list below).
4. District selection. The District Programme Management Unit, chaired by the District Magistrate, selects applications after scrutiny and sends them online to banks. The Deputy Commissioner (Industries) of the District Industries and Enterprise Promotion Centre is its member secretary.
5. Bank appraisal and loan. Nationalised, scheduled and gramin banks, and financial institutions notified by the RBI, can lend under the scheme. The brochure says banks sanction and disburse in a time-bound way.
6. Subsidy claims. The bank claims the margin money, the interest subsidy and the CGTMSE reimbursement online. You do not claim them yourself.

Which documents does CM-YUVA need?

The State MSME portal's scheme pages list:

• Identity proof (Aadhaar card, voter ID card or similar)
• Proof of age
• Training certificate
• Caste certificate, if applicable
• Disability certificate, if applicable
• Project report
• Any other document asked for

Because the order sets an education condition, also keep your Class 8 (or higher) certificate, and any diploma or degree, ready. Have your bank account details and quotations for any machinery or equipment in the project to hand too.

What are the common mistakes?

• Having taken a subsidy before. An earlier interest or capital subsidy under any other State or Central scheme (other than PM SVANidhi) bars you.
• Putting land or building purchase in the project cost. It is not allowed.
• Expecting a subsidy above ₹5 lakh of project cost. You can borrow more, but the subsidy is worked out on ₹5 lakh at most.
• Treating the margin money as cash in hand. It is adjusted in the loan account after four years, and is taken back if the unit closes.
• Missing instalments. Penal interest is not subsidised, and a defaulter loses the second phase.
• Choosing an excluded activity such as tobacco products or firecrackers.

What should I do now?

1. Check your age, education and training against the five conditions above.
2. Confirm you have never taken an interest or capital subsidy under another scheme.
3. Work out your own contribution (15%, 12.5% or 10%) and keep it ready.
4. Compare the alternatives: the Mukhyamantri Yuva Swarozgar Yojana (margin money on larger projects), the ODOP Margin Money scheme if your activity is your district's ODOP product, or a MUDRA loan from your bank.
5. Run the free eligibility checker to see every scheme that matches your project.

If you want help with the project report or the application, ask our expert team, or see our project finance service. The district unit and your bank decide every application. No consultant can promise a sanction.