Prime Minister Youth Loan Scheme Tiers Explained – Interest-Free, Low Markup & High-Value Loans (2025)
The Government of Pakistan launched the Prime Minister Youth Business & Agriculture Loan Scheme (PMYB&ALS) to empower entrepreneurs, create jobs, and boost the economy. This program offers financing options for young people, startups, and farmers at different interest rates and loan amounts.
The scheme is divided into three tiers to make it easier for applicants from different financial backgrounds to access funding. Each tier is designed to meet specific needs – from interest-free microloans for small businesses to high-value loans for large-scale projects.
Overview of PM Youth Loan Scheme Tiers
The loan scheme is structured into three categories based on loan amount, markup rate, and collateral requirements.
| Tier | Loan Amount | Markup Rate | Repayment Period | Collateral Requirement |
|---|---|---|---|---|
| Tier 1 | Up to PKR 500,000 | 0% (Interest-Free) | Up to 8 years | No collateral required |
| Tier 2 | PKR 500,001 – 1.5 million | 5% | Up to 8 years | May require partial collateral |
| Tier 3 | PKR 1.5 million – 7.5 million | 7% | Up to 8 years | Collateral mandatory |
This tier system ensures that everyone, from a street vendor to an established farmer or business owner, can access financial support.
Tier 1 – Interest-Free Loans for Small Businesses
Tier 1 focuses on helping micro and small enterprises. It is ideal for individuals with limited resources who want to start a small shop, home-based business, or expand an existing venture.
Key Features:
- Loan Amount: Up to PKR 500,000
- Interest Rate: 0% (Qarz-e-Hasna/Interest-Free)
- Repayment Time: Up to 8 years, with a grace period available
- Collateral: No collateral required
- Target Audience: Unemployed youth, students, women entrepreneurs, home-based workers
Benefits:
- Encourages self-employment with zero markup
- No burden of collateral
- Easy to manage repayment terms for low-income applicants
Tier 2 – Low Markup Business Loans
Tier 2 is designed for small and medium-sized businesses that require higher capital. This loan supports expansion, purchasing equipment, or setting up a medium-scale business.
Key Features:
- Loan Amount: PKR 500,001 to 1.5 million
- Interest Rate: 5% fixed for the entire tenure
- Repayment Period: Up to 8 years
- Collateral: May be required depending on bank policy
- Target Audience: SMEs, skilled professionals, farmers with larger landholdings
Benefits:
- Affordable financing with subsidized markup
- Helps in scaling existing businesses
- Suitable for both agriculture and non-agriculture enterprises
Tier 3 – High-Value Business and Agriculture Loans
Tier 3 caters to large-scale businesses and farmers who need substantial financing for industrial projects or large farming operations.
Key Features:
- Loan Amount: PKR 1.5 million to 7.5 million
- Interest Rate: 7% subsidized markup
- Repayment Period: Up to 8 years
- Collateral: Required for approval
- Target Audience: Established entrepreneurs, agro-based industries, manufacturing units
Benefits:
- Access to high-value financing at lower rates compared to commercial loans
- Encourages investment in agriculture and industrial sectors
- Long repayment time makes it easier to manage cash flow
Eligibility Criteria for All Tiers
To apply for any tier under the PM Youth Loan Scheme, applicants must meet the following conditions:
- Nationality: Pakistani citizens with a valid CNIC
- Age: 21 to 45 years (18 years for IT/E-commerce businesses)
- Business Plan: A clear and feasible plan is required
- Gender Preference: 25% quota for women
- Education: Basic education preferred but not mandatory
- Credit History: Clean credit record with no default history
Required Documents
Applicants need to prepare a set of documents before applying online:
- Scanned copy of CNIC (Front and Back)
- Passport-size photograph
- Business plan or feasibility study
- Proof of income (if applicable)
- Residential address verification (Utility bill)
- NTN (National Tax Number) if available
- Two personal references
How to Apply Online for PM Youth Loan Scheme
- Visit the official portal: pmybals.pmyp.gov.pk
- Choose your loan tier (1, 2, or 3) based on needs
- Fill out the application form with accurate details
- Upload required documents in PDF or JPG format
- Submit application and note down Application ID
- Track application status using CNIC or Application ID
Comparison of Tiers
| Feature | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|
| Loan Amount | Up to PKR 500,000 | PKR 500,001 – 1.5 million | PKR 1.5 – 7.5 million |
| Markup | 0% | 5% | 7% |
| Collateral | Not required | Partial (depending on bank) | Required |
| Target | Micro enterprises, home-based | SMEs, skilled professionals | Large businesses, agro-industries |
Tips to Increase Loan Approval Chances
- Prepare a realistic and professional business plan
- Ensure all documents are up-to-date and clear
- Use a mobile number registered under your CNIC
- Apply for a loan amount matching your repayment ability
- Avoid providing false or incomplete information
Participating Banks
The scheme is managed through public and private banks across Pakistan, including:
- National Bank of Pakistan (NBP)
- Bank of Punjab (BOP)
- Habib Bank Limited (HBL)
- Bank Alfalah
- Askari Bank
- Khushhali Microfinance Bank
- Bank of Khyber
FAQs
What is the difference between Tier 1, 2, and 3 loans?
Tier 1 offers interest-free loans up to PKR 500,000, Tier 2 provides subsidized loans up to 1.5 million at 5% markup, and Tier 3 offers high-value financing up to 7.5 million at 7% markup.
Do I need collateral for all tiers?
Collateral is not required for Tier 1, may be partially required for Tier 2, and is mandatory for Tier 3 loans.
Can women apply for all tiers?
Yes, 25% of the total loans are reserved for women in all three tiers.
What is the repayment period?
All tiers offer repayment terms of up to 8 years with possible grace periods.
Final Thoughts
The Prime Minister Youth Loan Scheme tiers create opportunities for everyone, from small vendors to large entrepreneurs. With a flexible structure covering interest-free microloans, low markup SME loans, and high-value business financing, the program is a key driver for economic growth in Pakistan.
Applicants should carefully evaluate their needs, prepare a strong business plan, and choose the right tier to secure funding. With government support and long-term repayment options, the PMYB&ALS program provides a reliable path toward financial independence and business expansion in 2025.
