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


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

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

The CGTMSE scheme is designed to provide credit guarantees to financial institutions for loans extended to micro and small enterprises (MSEs). The goal is to promote the growth of MSEs by facilitating easy access to finance and reducing the risk for financial institutions offering loans to these enterprises.
This scheme aims to improve the financial inclusion of MSEs, making it easier for them to access funding without needing collateral.

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  • For MSEs (Enterprises):
    • • Proof of Business Registration: Documents establishing the existence of the business (e.g., registration with the Ministry of MSME, GST, etc.).
    • • Loan Application: A formal loan application with all the necessary financial details.
    • • Financial Statements: Audited financial statements for the last 2 years (if applicable).
    • • Project Report: A detailed project report outlining the purpose and plan for the loan.
    • • Collateral Details: If applicable, details about any collateral offered.
  • For Financial Institutions:
    • • Loan Sanction Documents: Documents confirming the loan sanctioned to the MSE.
    • • Guarantee Application: A formal application for guarantee coverage under CGTMSE.
    • • Guarantee Fee Payment: Proof of payment of the guarantee fee by the institution.

  • For Micro and Small Enterprises (MSEs):
    • • Type of Enterprise: The scheme applies to Micro and Small Enterprises (MSEs) engaged in manufacturing, services, or both.
    • • Credit Facility: Enterprises seeking credit facilities, including term loans and working capital loans, can apply for the scheme.
    • • Loan Amount: Loans up to ₹200 lakh (₹2 crore) can be covered under the CGTMSE scheme.
    • • Collateral-Free Loan: MSEs can avail themselves of collateral-free loans under the scheme, reducing the financial burden of having to provide physical assets as security.
    • • Location: The enterprise must be located in India.
    • • Financial Health: The enterprise should not be under liquidation or facing insolvency proceedings.
  • For Financial Institutions:
    • • Eligibility: The scheme is available to eligible financial institutions, including Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, Non-Banking Financial Companies (NBFCs), and others approved by CGTMSE.
    • • Loan Purpose: The loan should be for productive purposes such as working capital, capital expenditure, modernization, and expansion of the business.

  • • Collateral-Free Credit: MSEs can avail themselves of loans without the need to provide collateral, enabling easier access to credit.
  • • Risk Mitigation for Lenders: Financial institutions benefit from a credit guarantee, which reduces the risk associated with lending to micro and small enterprises.
  • • Boost to MSE Growth: The scheme encourages the growth of MSEs by improving their access to finance, fostering innovation, and promoting entrepreneurship.
  • • Financial Inclusion: It plays a vital role in promoting financial inclusion by facilitating credit flow to the underserved micro and small enterprises sector.
  • • Reduced Borrowing Costs: With the reduced risk for lenders, MSEs may also experience lower interest rates and more favorable lending terms.
  • • Promotes Employment: As MSEs grow with the support of this scheme, they create more job opportunities, contributing to the overall economic growth.
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