CGTMSE Scheme
Collateral-Free Credit for MSMEs
Expand your business horizons without the worry of collateral. We support Micro and Small Enterprises (MSEs) with credit guarantees up to ₹5 Crore, backed by the Government of India and SIDBI.
What is CGTMSE?
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was set up by the Ministry of MSME, Government of India and SIDBI. Its primary objective is to facilitate the flow of credit to the MSE sector without the hassles of collateral or third-party guarantees.
Under this scheme, the lender (Bank/NBFC) gives importance to project viability rather than collateral security. If the borrower fails to repay the loan, the trust guarantees to make good the loss incurred by the lender up to a specified percentage (75-85%).
We facilitate access to this scheme for new and existing enterprises. Whether you are into manufacturing, services, or retail trade, you can avail term loans and working capital facilities under CGTMSE to scale your operations instantly.
Features of the Scheme
Credit Ceiling
The scheme covers credit facilities (Fund-based and Non-fund based) extended by Member Lending Institutions (MLIs) up to ₹500 Lakhs (₹5 Crore) per borrower.
No Collateral Required
The primary feature is that the borrower does not need to provide any collateral security or third-party guarantee for the loan amount approved under this scheme.
Hybrid Security
CGTMSE now allows 'Hybrid Security'. This means you can get a guarantee cover for the uncovered portion of the loan if you have partial collateral to offer.
Guarantee Fee
An Annual Guarantee Fee (AGF) is charged on the guaranteed amount. The fee varies from 0.37% to 1.35% depending on the loan amount and borrower category.
Sector Coverage
Applicable to new and existing Micro and Small Enterprises engaged in Manufacturing, Services, and Retail Trade.
Women Entrepreneurs
Special concessions are available for Women Entrepreneurs and SC/ST borrowers, including higher guarantee coverage (85%) and reduced guarantee fees.
Rehabilitation
Assistance is also available for the rehabilitation of sick MSE units, provided the unit is considered viable by the lending bank.
Extent of Guarantee Coverage
The extent of guarantee cover provided by the Trust varies based on the category of the borrower and the loan amount:
| Category of Borrower | Loan up to ₹5 Lakhs | ₹5 Lakhs to ₹5 Crore |
|---|---|---|
| Micro Enterprises | 85% | 75% |
| Women Entrepreneurs / SC / ST | 85% | 85% |
| Units in North East Region (NER) | 80% | 75% |
| All Other Category Borrowers | 75% | 75% |
Eligibility & Documentation
Who is Eligible for CGTMSE?
The scheme is applicable for new and existing Micro and Small Enterprises. Key criteria include:
Manufacturing units, Service sector enterprises, and Retail Trade.
Proprietorships, Partnerships, Limited Liability Partnerships (LLPs), and Private Limited Companies.
Educational Institutions, Agriculture, Self Help Groups (SHGs), and Training Institutions are generally covered, but pure agriculture is excluded.
Both Fund-based (Term Loans, Working Capital) and Non-fund based facilities (Letter of Credit, Bank Guarantee) are covered.
Required Documents
To apply for a loan under CGTMSE through an MLI (Bank/NBFC), keep the following ready:
- •Udyam Registration: Mandatory registration certificate for MSMEs.
- •Business Plan/Project Report: Detailed report containing business model, projections, and viability.
- •Company Documents: PAN Card, Deed of Partnership / Memorandum & Articles of Association.
- •Tax Returns: Income Tax Returns (ITR) for the last 1-3 years (for existing units).
- •KYC Documents: Identity and Address proof of the promoters/directors.
How to Apply for CGTMSE Coverage
The borrower cannot apply directly to CGTMSE. The application is processed via Member Lending Institutions (MLIs). Follow these steps:
Register your business as an MSME on the Udyam Registration portal.
Prepare a detailed project report showcasing the financial viability of your business.
Approach a Bank or NBFC (MLI) with your application and request coverage under the CGTMSE scheme.
Once the bank sanctions the loan, they will apply to the CGTMSE trust for guarantee cover.
Upon approval and payment of the guarantee fee, your loan is secured without collateral.
Why Choose CGTMSE?
Empowering Small Businesses
The biggest hurdle for first-time entrepreneurs is the lack of third-party guarantees or tangible assets to pledge as collateral. CGTMSE removes this bottleneck. It empowers banks to lend based on the strength of your business idea rather than your asset base.
With a high claim settlement ratio and a streamlined online process for banks, the scheme is widely accepted by almost all Public Sector Banks, Private Banks, and major NBFCs across India. It also encourages lenders to offer lower interest rates as their risk is covered by the Government trust.
Frequently Asked Questions on CGTMSE
What is the maximum loan amount covered under CGTMSE?
The scheme covers credit facilities up to ₹500 Lakhs (₹5 Crore) per borrower. This includes both term loans and working capital limits.
Do I need to pay any fee for the guarantee?
Yes, an Annual Guarantee Fee (AGF) is charged. It usually ranges from 0.37% to 1.35% of the guaranteed amount per year, depending on the loan size and borrower category. This fee is paid to the Trust.
Can I apply for CGTMSE directly on the website?
No, borrowers cannot apply directly. You must apply for a loan at a Member Lending Institution (Bank/NBFC). The lender will then apply to CGTMSE for the guarantee cover on your behalf.
Is collateral completely waived off?
Yes, for the portion of the loan covered under CGTMSE, no collateral or third-party guarantee is required. However, under the Hybrid Security model, you can provide collateral for a part of the loan and get CGTMSE cover for the remaining unsecured part.
Are retail traders eligible for this scheme?
Yes, Retail Trade is now eligible for coverage under the CGTMSE scheme, along with Manufacturing and Service sector enterprises.
What happens if I default on the loan?
If the loan becomes an NPA (Non-Performing Asset), the lender can claim the guaranteed amount (up to 75-85% of the default) from the CGTMSE Trust after following due legal process. You remain liable to repay the bank.
Is Udyam Registration mandatory?
Yes, Udyam Registration is mandatory for any MSME to avail benefits under the CGTMSE scheme.
Scale Your Business Without Limits!
Get access to collateral-free funding and turn your business dreams into reality.