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    Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) is a trust established by the Government of India, under the Ministry of Micro, Small and Medium Enterprises (MoMSME) and Small Industries Development Bank of India (SIDBI). Launched in 2000, CGTMSE offers credit guarantee to financial institutions that provide loans to MSMEs. CGTMSE provides a guarantee to lending institutions up to a certain limit for all lending done by them to the MSME sector

    What is a Credit Guarantee under CGTMSE?

    Credit guarantee refers to a situation where the loan to the applicant is backed by a party without the need for any external collateral or third party guarantee. Here, the loan sanctioned by the member lending institution is backed by the scheme which provides the guarantee cover for a large portion of the loan amount. Under CGTMSE scheme, both new and existing micro and small enterprises including service enterprises are eligible for a collateral free loan with maximum credit cap of Rs. 2 crore. Credit Guarantee Fund Scheme for Micro and Small Enterprises was launched to promote SME and MSME sector in India.

    Features of the CGTMSE Scheme*

    -Interest Rate

    -Guarantee for credit facilities

    -Eligible Entities

    -Guaranteed Coverage

    As per business requirements

    With No Collateral Security or Third Party Guarantee

    Micro and Small Enterprises engaged in manufacturing and services up to Rs. 2 crore and retail trade up to Rs. 1 crore

    75% of the loan/limit not covered by collateral security

    Interest Rate offered by banks on loans under CGTMSE Scheme

    The interest rate offered by banks under credit guarantee scheme shall depend upon the applicant’s profile, business requirements and project cost. The interest rate offered by banks are comparatively low, as compared to other direct loan schemes or deals. The credit guarantee coverage is offered maximum up to 75% of the total project cost.

    Eligibility for the CGTMSE Scheme

    Let us look at the eligibility criteria for CGTMSE loan scheme for credit providers and credit borrowers. Lending institutions who provide funding support to specific sectors are in agreement with CGTMSE. The entities and institutions that are eligible to avail loans under CGTMSE scheme are as follows:

    Lending Borrowers

    All Existing and New Small and Medium Enterprises (SMEs)

    Documents required for loan application

    Below stated are the documents required for Loan under CGTMSE scheme and its coverage:
    – Duly filled CGTMSE loan application form with passport-sized photographs
    – Business incorporation letter / Company registration certificate
    – Business Project Report
    – CGTMSE Loan Coverage Letter
    – Copy of loan approval from the bank
    – Any other document required by the bank

    CGTMSE also provides rehabilitation assistance to the business units. If a business unit is in a bad condition due to factors that are beyond the control of the management, then CGTMSE covers the loan for rehabilitation extended by the lender within the credit cap of Rs. 1 crore.

    Source –