Credit Guarantee Fund Trust Micro and Small Enterprise

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

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CGTMSE for Micro and Small Enterprises helps you get easy, collateral-free loans. The scheme covers up to ₹10 crore per borrower, boosting your access to credit without needing to pledge any assets.

 

Highlights

  • CGTMSE, a flagship scheme started in 2000 by the Ministry of MSME and SIDBI, offers collateral-free loans to Micro and Small Enterprises.
  • Removes the need for third-party guarantees or pledged assets.
  • Supports new and existing businesses in manufacturing, services, retail, and trading sectors.
  • Recently, loan coverage increased up to ₹10 crore per borrower under CGTMSE 2.0.

What is CGTMSE?

  • CGTMSE helps you access loans from banks or NBFCs without pledging any assets as security.
  • The government guarantees up to 85% of your loan amount.
  • The scheme makes credit easier and faster for startups and small businesses.

Objectives

  • You get easier access to loans as a first-time entrepreneur or MSE.
  • Banks and Non-Banking Financial Companies (NBFCs) lend to you without fear because they get a credit guarantee.
  • The scheme helps promote financial inclusion and new ideas all over India.

Benefits of the CGTMSE Scheme

  • Collateral-Free Loans
    You get easy access to credit without pledging any assets or security.
  • Higher Loan Limit
    You can avail loans up to ₹10 crore for working capital or term loans.
  • Hybrid Security Option
    You can combine secured and unsecured portions for flexible borrowing.
  • Faster Approvals
    Your loan gets quicker sanction, thanks to the lender’s guarantee.
  • Special Support for Startups/Women/NER Units
    You enjoy higher guarantee coverage and fee discounts if you belong to any of these categories.

Financial Assistance Under the CGTMSE Scheme

Type of Assistance

Details

Maximum Loan Amount

Up to ₹10 crore

Guarantee Cover

75-85% of the loan amount, depending on borrower type.

Special Discounts

Available for women, SC/ST, North East Region (NER) entrepreneurs

CGTMSE loans can be used for business expansion, technology upgrades, machinery purchase, and working capital.

Interest Rates & Fees

  • Interest Rate: As per the lender, typically starting from 13% p.a.
  • Guarantee Fee: One-time fee ranges from 1% to 1.8%
  • Annual Service Fee: Varies from 0.37% to 2.30%, based on risk and loan size.

Eligibility for CGTMSE Loan

You are eligible if:

  • You’re a new or existing MSE in the manufacturing, services, retail or trading sector.
  • You are a startup or first-generation entrepreneur.
  • You are a registered educational or training institution.

You are not eligible if:

  • You're a Self-Help Group (SHGs) or a Joint Liability Group (JLG) not registered as a business.
  • You already have a loan under another guarantee scheme.
  • Your loan is for purely agricultural, fishing, poultry, or dairy purposes.

Documents Required for CGTMSE Loan

  • Udyam Registration Number
  • Business registration documents
  • KYC Documents

Application Process for CGTMSE Loan

You can apply:

  • Offline by approaching a bank, Non-Banking Financial Company (NBFC), or financial institutions. The lender applies for CGTMSE guarantee cover on your behalf.

Examples of Where the CGTMSE Loan Can Be Used

  • Digital printing business offering customised prints.
  • A microelectronics unit making small electronic parts.
  • Women-led food processing unit producing packaged snacks.
  • Chemical manufacturing producing industrial and household chemicals.
  • Glassware business creating decorative glass items.

Frequently Asked Questions

1. What is the CGTMSE loan interest rate?

The CGTMSE loan interest rate is set by individual banks and financial institutions, not by the credit guarantee fund trust itself. Typically, interest rates range from 10% to 14% per annum, depending on the lender and the applicant’s credit profile. Some banks may offer rates starting from 8% or 10.30% per annum for specific categories.

2. What is the coverage period of CGTMSE?

The CGTMSE coverage period matches the tenure of the loan. For term loans, the guarantee cover lasts for the entire repayment period. For working capital loans, the coverage is generally provided for up to 5 years from the guarantee start date.

3. What is the lock-in period in CGTMSE?

The lock-in period in CGTMSE is 18 months from the date of the guarantee cover commencement. During this period, the lender cannot invoke the guarantee except in cases of fraud or willful default.

4. How do I check my CGTMSE eligibility?

To check your CGTMSE scheme eligibility: Ensure your business is a micro or small enterprise engaged in manufacturing, services, retail, or trading. Approach a bank or NBFC from the CGTMSE bank list. Prepare required documents such as business registration, KYC, Udyam Registration, PAN, project report, etc. The lender will assess your eligibility and forward your application to the credit guarantee fund trust if you meet the criteria.

5. How does the government help MSMEs scale?

By offering capacity-building schemes, subsidies, infrastructure grants, and fostering an entrepreneurial ecosystem through platforms like Udyam and GeM.