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Loan MSME

CGTMSE — Collateral-Free Credit

Bank loan up to ₹10 crore without collateral — Government of India guarantees the lender

Maximum benefit
₹10 Cr
Typical processing
CGTMSE cover within 2–3 days of lender request; overall loan timeline depends on lender (typically 15–45 days)
Apply on official portal

About this scheme

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a credit guarantee scheme operated jointly by the Government of India and SIDBI. It provides guarantee cover to Member Lending Institutions (MLIs) for collateral-free credit extended to MSEs. The scheme transforms how lenders approach MSE credit — by removing the collateral barrier, CGTMSE has enabled over Rs. 4 lakh crore of disbursements as of 2024.

What you get

  • Credit-guarantee cover up to Rs. 5 crore — the lender is protected; you get collateral-free credit
  • Guarantee coverage: 85% (for loans up to Rs. 5 lakh) / 75% (Rs. 5–50 lakh) / 75% (Rs. 50 lakh–5 cr)
  • No collateral or third-party guarantee required for the covered portion
  • Lower interest rates than non-CGTMSE collateral-free options
  • Applies to both term loans and working-capital facilities
  • Available across manufacturing, services, retail trade (since 2018), and even education/healthcare units
  • Combined cover available with other Government subsidy schemes (CLCSS, ZED, PMEGP)

Who qualifies

New and existing Micro and Small Enterprises (proprietorship, partnership, LLP, private limited, OPC). Eligible activities: manufacturing and services (since 2017). Loan amount up to Rs. 5 crore per borrower. The lending institution must be a CGTMSE Member Lending Institution (MLI) — covers all major public-sector banks, private banks, RRBs, NBFCs registered with RBI, and SFBs. The borrower must be Udyam-registered. Existing units should have a satisfactory credit history.

All industries qualify (no NIC restriction).

Business types
ProprietorshipsPartnershipsPrivate LimitedLLPsOne Person Companies

Available across India (central scheme).

How to apply

  1. 1Approach any CGTMSE Member Lending Institution (most banks and major NBFCs)
  2. 2Submit standard MSE loan application — Udyam registration, project report, financials, KYC
  3. 3Lender does credit appraisal as usual; if approved, lender requests CGTMSE cover via online portal
  4. 4CGTMSE cover is granted within 2–3 working days of lender's request
  5. 5Loan disbursement happens after cover is granted — guarantee fee (1.0%–1.5% upfront + 0.5%–0.75% annual) typically passed to borrower
  6. 6Borrower repays as per loan agreement; CGTMSE cover protects the lender if borrower defaults

Key terms and conditions

  • Guarantee ceiling ₹10 crore per borrower (raised from ₹5 crore, CGTMSE Circular 250/2024-25, effective 1 Apr 2025)
  • Annual Guarantee Fee (AGF): 0.37% p.a. up to ₹10 lakh, rising in slabs to 1.20% p.a. for ₹5–10 crore — passed to borrower
  • Coverage 75%–85% of the loan depending on category (women, SC/ST, NE, ZED-certified get the higher slab)
  • Budget 2026-27: CGTMSE-backed guarantee now also available on invoice discounting via TReDS
  • Coverage lapses if the loan is restructured without CGTMSE approval; NPA triggers invocation by the lender

What disqualifies you

  • Borrower must be Udyam-registered — micro/small classification only
  • Retail and wholesale trade eligible (since 2022) with sub-ceilings set by the lender
  • Agriculture and self-help groups excluded (separate schemes apply)
  • Loans above ₹10 crore not covered; partial cover up to ₹10 crore is possible
  • Borrower in default with any other lender — application will be declined

Documents typically required

  • Udyam registration
  • Project report
  • Last 2 years ITR if existing
  • Bank account statement

Frequently asked questions

Q. Do I apply to CGTMSE directly?
No. CGTMSE is a guarantee fund, not a lender. You apply to a bank/NBFC for a loan, and the lender then requests CGTMSE cover on your loan.
Q. Who pays the guarantee fee — me or the bank?
Technically the lender pays CGTMSE, but the fee is almost always passed on to the borrower as part of the loan terms. Get an itemised breakup before signing.
Q. Is CGTMSE cover automatic for any small loan?
No. The lender has to specifically opt for CGTMSE cover for your loan, and you have to qualify (Udyam-registered, micro/small enterprise). Ask explicitly for CGTMSE-covered loan.
Q. My business is a kirana store — am I eligible?
Yes, retail trade is covered since 2018, subject to a Rs. 1 crore loan cap.

The content above is compiled from public information published by the scheme authority. Eligibility, benefits, and procedures are subject to change. Confirm details directly with the official portal before applying. BharatSeal does not process scheme applications.