✅ What is a CGTMSE Loan?
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is an initiative launched by the Indian Government in collaboration with SIDBI (Small Industries Development Bank of India). Its main aim is to offer business loans without requiring any collateral to Micro and Small Enterprises (MSEs), helping entrepreneurs access funds more easily and grow their businesses.
✅ Highlights of the CGTMSE Loan Scheme
| Particular | Description |
|---|---|
| Loan Limit | Maximum loan amount of ₹5 crore |
| Collateral Requirement | No need to provide collateral security |
| Who Can Apply | Micro and Small Businesses, including new entrepreneurs |
| Loan Purpose | Suitable for business setup, expansion, equipment purchase |
| Guarantee Coverage | Typically between 75% to 85% of the loan amount |
| Types of Loan | Term Loans and Working Capital Loans |
| Offered By | Banks, NBFCs, RRBs, Small Finance Banks |
✅ Who is Eligible?
To qualify for this scheme:
- The business should be registered as Micro or Small Enterprise as per the MSME norms.
- Activities may include manufacturing, services, or trading.
- The applicant should have no loan default history.
- Loans must be sanctioned by a CGTMSE-approved financial institution.
- First-time business owners and startups can also apply.
✅ Step-by-Step Process to Apply
- Create a Business Plan
Prepare a clear and well-documented plan explaining your business model, purpose of the loan, revenue goals, etc. - Get Udyam Registration
Register your business under MSME via udyamregistration.gov.in. - Choose a Lending Institution
Approach a bank or NBFC that participates in the CGTMSE scheme. - Submit Loan Application
Share your loan request along with necessary documents and business plans. - Loan Evaluation & Approval
The lender will assess your profile and sanction the loan if found suitable. - Guarantee Coverage by CGTMSE
The lender will apply for a CGTMSE guarantee to cover the sanctioned loan.
✅ Documents You’ll Need
- Udyam (MSME) Registration Certificate
- Business Plan or Project Proposal
- PAN Card and Aadhaar of Applicant
- Income Tax Return (ITR) documents
- Recent bank statements
- Address and ID Proof
- Sales or Purchase Invoices (if any)
- Equipment quotation (if loan is for machinery purchase)
✅ Fees Involved in CGTMSE Coverage
| Loan Amount | One-Time Guarantee Fee | Annual Fee |
|---|---|---|
| Up to ₹5 lakh | 1.00% | 0.50% of loan amount |
| ₹5–50 lakh | 1.35% | 0.75% |
| Above ₹50 lakh | 1.80% | 0.85% |
Note: Women-owned businesses and enterprises in NE regions may enjoy reduced fees.
✅ Advantages of CGTMSE Loans
- Zero collateral required
- Ideal for startups and first-time business owners
- Boosts credit access for small enterprises
- Makes banks more willing to lend due to government-backed guarantee
- Encourages business growth in underserved areas
✅ Frequently Asked Questions
Q. Can I apply for a CGTMSE loan if my business is newly started?
Yes, new and first-time entrepreneurs are eligible under this scheme.
Q. Do traders qualify for the loan?
Yes. Traders can now benefit from CGTMSE coverage too.
Q. Is CGTMSE a subsidy?
No, it’s a loan guarantee, not a subsidy. If the business fails, the trust compensates the lender for a major portion of the loan.
Q. What happens in case of non-repayment?
In case of default, the trust reimburses up to 75–85% of the outstanding amount to the lender.
✅ Banks and Institutions Offering CGTMSE Loans
You can approach the following for CGTMSE-backed loans:
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- SIDBI
- HDFC Bank
- Axis Bank
- Canara Bank
- Indian Bank
- Bank of Baroda
