CGTMSE- Credit Guarantee Fund Scheme for Micro and Small Enterprises Loan

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) is a vital government initiative aimed at providing collateral-free credit to the MSME sector in India. The scheme is designed to foster growth, innovation, and employment generation in the country. In this comprehensive guide, we’ll explore the CGTMSE, its eligibility criteria, the application process, and interest rates offered by various banks. At Crediting.in, our mission is to provide you with the best financial advice, insights, and news to help you make informed decisions for your business.

An Overview of the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)

Launched in 2000, the CGTMSE is a joint initiative of the Government of India and the Small Industries Development Bank of India (SIDBI) to offer collateral-free loans to micro and small enterprises. The scheme aims to strengthen credit delivery systems and facilitate the flow of funds to the MSME sector, which is the backbone of the Indian economy.

Eligibility Criteria for CGTMSE Loans

The CGTMSE scheme is open to a wide range of businesses, including:

A. New and existing micro and small enterprises engaged in manufacturing or service activities

B. Business enterprises owned or operated by women entrepreneurs

C. Units financed under the Prime Minister’s Employment Generation Programme (PMEGP) and other government-supported schemes

Loan Coverage and Tenure under CGTMSE

Under the CGTMSE, eligible enterprises can avail collateral-free loans up to ₹200 lakhs. The guarantee cover provided by the scheme ranges from 50% to 85% of the sanctioned loan amount, depending on the category of the borrower. The maximum tenure for loans under the CGMSE is ten years.

Interest Rates for CGTMSE Loans from Different Banks

Interest rates for CGTMSE loans vary among different banks and financial institutions, generally linked to the respective bank’s prime lending rate (PLR) or the marginal cost of funds-based lending rate (MCLR). Here’s an overview of the interest rates offered by some popular banks:

A. State Bank of India (SBI) (insert link): 9.55% + p.a.

B. Bank of Baroda (insert link): 9.70% +p.a.

C. Punjab National Bank (PNB) (insert link): 9.95% +p.a.

D. HDFC Bank (insert link): 10.50% +p.a.

E. ICICI Bank (insert link): 910.50% +p.a.

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Annual Guarantee Fee (AGF)

AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facilities as detailed below on all the guarantees approved/ renewed on or after April 01, 2023 including enhancement in existing working capital account already covered under Guarantee Scheme.

How to Apply for a CGTMSE Loan

To apply for a loan under the CGMSE scheme, follow these steps:

A. Identify a suitable lender: CGMSE loans are offered by various banks and financial institutions, including public and private sector banks and regional rural banks (RRBs).

B. Gather required documentation: Prepare necessary documents, such as your business plan, proof of identity, proof of address, and financial statements.

C. Fill out the application form: Complete the CGMSE loan application form available at the lender’s branch or website.

D. Submit the application and documents: Submit your application form along with the required documents to your chosen lender.

Conclusion :

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) plays a crucial role in empowering MSMEs by providing collateral-free credit facilities. By understanding the scheme’s features, eligibility criteria, and application process, entrepreneurs can apply for Scheme.