Providing accessible bank credit without the complexities of collateral or third-party assurances would serve as a significant form of assistance for aspiring initial entrepreneurs in achieving their goal of establishing their own Micro and Small Enterprise (MSE). With this goal in mind, the Ministry of Micro, Small & Medium Enterprises (MSME) under the Government of India introduced the Credit Guarantee Scheme (CGS). The scheme aims to enhance the credit distribution mechanism and streamline the provision of credit to the MSE sector. To put this scheme into action, the Government of India, in collaboration with SIDBI, established the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
Interest Rates: As per RBI’s Guidelines is eligible for coverage under CGTMSE.
Eligible Activities: · Manufacturing and Services including Retail trade is allowed.
Educational and Training institutions, Self Help Groups (SHGs), and agriculture-related activities are not eligible
Loan Amount : For Micro and Small Enterprises (MSEs)– Credit facility up to Rs. 500 lakh can be covered on an outstanding basis
For Regional Rural Banks (RRBs) and Select Financial Institutions credit facilities up to Rs. 50 lakh is allowed.
Ceiling for Guarantee coverage raised from Rs. 200 lakh to Rs. 500 lakh.
CGuarantee fee reduced to diminish the overall cost of borrowings to MSEs.
Micro Finance Institutions as Member Lending Institutions (MLIs) are now eligible Concessions related to fees and increased coverage to SC/STs.
Reduced Guarantee fee by 10% and coverage extent increased to 85% to Women, ZED Certified Units and Units in Aspirational Districts Annual Guarantee Fee structure revised and fee reduced to as low as 0.37%.
| 1 | Duly filled CGTMSE loan application form with passport-sized photographs. |
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| 2 | Business Incorporation or Company Registration Certificate. |
| 3 | Business Project Report. |
| 4 | CGTMSE Loan Coverage Letter. |
| 5 | Copy of loan approval from the Bank. |
| 6 | Any other document required by the Bank. |
| 1 | Eligible Borrowers – All Existing and New Micro and Small Enterprises (MSEs). |
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| 2 | Educational institutions, agriculture, training institutions, and Self-Help Groups (SHGs) are not eligible for guarantee cover under CGTMSE. |
| 3 | Guarantee Coverage: From 75% – 85% (50% Coverage for retail activity). |
| 4 | Collateral / Third Party Guarantee: Not required. |
| 5 | Eligible Member Lending Institutions (MLIs): More than 100: PSUs, NBFCs, RRBs, Private Banks, SUCBs, Fls, SFBs, and Foreign Banks. |
| 6 | Annual Guarantee Fee for amount up to Rs. 1 crore. |
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