CGTMSE Loan
CGTMSE Loan is a Collateral free Loan available to MSME and startups comprising of Overdraft ,Term Loan and Bank Guarantee
CGTMSE Loan
- Credit Guarantee Fund Trust For Micro and Small Enterprises(CGTMSE) is a trust established in the year 2000 by the Government of India (GOI) and Small Industries Development Bank of India (SIDBI). The trust’s Objective is to increase the flow of Collateral free credit to micro and small enterprises .
- Msme loan are Loans sanctioned under various Government backed Schemes.(read all scheme details .HERE ).
- Msme Loans are Collateral free as the guarantee is given by Government
Why choose CGTMSE Loan
- Eligible activities: You are eligible under the Msme scheme if your business falls within the manufacturing and service-based category, including retail trade and service ITes industry.
- Loan amount: If you own an MSE, then the credit facility you can avail of runs up to ₹200 lakh. With New MSME guideline this facility extended to 500 lakhs.
- Guarantee coverage: For Msme Loan , you can avail of 75-85% repayment guaranteed by Msme entity, in case you default on the principal loan amount. However, this feature only applies if the principal loan amount is up to ₹50 lakh.
- Collateral: For Msme loan , you require absolutely no collateral or third-party guarantee,Though Personal guarantee might be required.
Overdraft
Unsecured Business Overdraft of upto 500 lakhs with revolving 12 month tenor
Term Loan
Unsecured Term loan of upto 500 lakhs for maximum 60 months
Euipment Loan
Loan without collateral for machine purchase of value upto 500 lakhs for Maximum tenor of 60 months
Bank Guarantee
Bank guarantee without any collateral ,Renewal every 12 months
Steps to avail Business/MSME Loan under the CGTMSE Scheme
The objective of the CGTMSE is to enable the banks to look at small and micro businesses with objectivity and give more importance to project viability and business model validation. To cover the loan under the credit guarantee fund scheme, the borrower has to pay an additional guarantee fee and service charge in addition to the interest charged by the bank. The current CGTMSE fee is payable at the rate of 1.5%. It is payable at 0.75% for the North-Eastern region including the state of Sikkim.
The procedure for applying and availing loans under CGTMSE is as follows:
Step 1. Formation of the Business Entity
Before even starting the procedure for loan approval under the CGTMSE, the borrower has to incorporate a private limited company, limited liability partnership, one-person company, or a proprietorship according to the nature of the business and obtain necessary approvals and tax registrations for executing the project.
Step 2. Preparing a Business Report
Borrowers need to conduct a market analysis and prepare a business plan containing relevant information, such as business model, promoter profile, projected financials, etc. The report is then presented to the credit facility and an application is filed for getting the loan under the CGTMSE scheme. However, businesses should consider that such project reports be prepared by experienced professionals. This shall increase the chances of approval.
Step 3. Sanctioning of Loan from the Bank
The request for a bank loan usually contains credit terms and working capital facilities. After the application and business plan are under process, banks carefully analyze the viability of the business model and process the loan application, and accord sanction, as per the bank’s policy.
Step 4. Obtaining the Guarantee Cover
After the loan is sanctioned the bank applies to CGTMSE authority and obtains the guarantee cover.
- If the loan is approved by CGTMSE, the borrower will have to pay the guarantee fee and service charges. The CGTMSE loan application form can be downloaded from its official website.
The extended list of Member of Lending Institutions (MLIs) under the CGTMSE scheme contains 141 banks including all the major rural, urban, public sector, and private sector banks of India. The list contains some of the larger banks, such as the State Bank of India, United Bank of India, Punjab National Bank, etc.
Note: CGTMSE does not grant any loan, credit facilities, or subsidies and nor does it have any Loan Agents, Agencies for arranging loans, or credit guarantees offered via its MLIs. - Post payment of CGTMSE fee your bank can disburse your Loan amount subject to signing of required documents .