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Collateral Free Credit and Credit Guarantee up to Rs. 2 Crore to MSMEs

Credit Guarantee Fund Scheme for Micro and Small Enterprises

Credit guarantee fund trust for Micro and Small Enterprises (CGTMSE) has framed a scheme “Credit Guarantee Fund Scheme for Micro and Small Enterprises” which is a central government credit scheme under the ministry of Development Commissioner Ministry of Mirco, Small, and Medium Enterprises [DC-MSME] to provide Collateral Free Credit and Credit Guarantee up to Rs. 2 Crore to MSMEs.

The Micro and Small Enterprises sector cannot approach directly to the Trust for credit sanctioning, they have to approach the Banks or Financial Institutions (MLIs) that have already been registered with the Trust as MLIs with their respective proposals of credit requirements.

List of MLI

Sukanya Samriddhi Account Scheme – Government Tax Saving Scheme

Key objectives of Credit Guarantee Fund Scheme for Micro and Small Enterprises

(a)To facilitate the flow of credit and to strengthen the credit delivery system in the MSE sector, the Government of India has launched this credit guarantee scheme under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) formed by the Government of India and SIDBI
(b)To provide Collateral Free Loans and to meet the Working Capital requirement of the Existing and New entrepreneurs by the Banks and Financial Institutions. Trust Fund will provide the guarantee to the Banks and Financial Institutions to the extent of 75% of the loan amount.

Eligibility of Credit Guarantee Fund Scheme for Micro and Small Enterprises

  1. Existing as well as New Micro and Small Enterprises engaged in the manufacturing or service activity excluding Agriculture, Self Help Groups (SHGs), etc are eligible to opt for this scheme.

All Activities covered under MSMED Act 2006 are eligible for coverage under the said scheme. Finance for wholesale trade is also eligible for coverage.

  • Small road and Water Transport Loans are eligible for guaranteed coverage.
  • A permanent Account Number (PAN) is mandatory for availing of the credit facility from the eligible lending institution.
  • Micro and Small Enterprises with a Maximum Credit Cap of Rs. 2 Crore are eligible to be covered. Credit facilities can be availed by more than one bank and/or financial institution jointly and/or separately subject to a maximum limit of Rs. 2 Crore per borrower.
  • Banks and Financial Institutions can apply to the office of DC-MSME/ MSME-DIs for avail of the support.
  • MSMEs are required to contact the respective Banks and Financial Institutions for getting the credit.

Guarantee structure – [Maximum extent of Guarantee] Credit Guarantee Fund Scheme for Micro and Small Enterprises

CategoryUp to Rs. 5 LakhAbove Rs. 5 Lakh up to Rs. 50 LakhAbove Rs. 50 Lakh up to Rs. 2 Crore
Micro Enterprises85% of the amount in default subject to a maximum of Rs. 4.25 lakh75% subject to a maximum of Rs. 37.50 Lakh75% of the amount in default subject to a maximum of Rs. 1.5 crore
Women Entrepreneurs/ Units located in North East Region including Sikkim – Other than credit facility up to Rs. 5 Lakh to Micro Enterprises80% subject to a maximum of Rs. 40 Lakh75% of the amount in default subject to a maximum of Rs. 1.5 crore
MSE Retail/ Wholesale Trade (Up to Rs. 1 Crore)50% subject to a maximum of Rs. 50 Lakh
All other categories of borrowers75% of the amount in default subject to a maximum of Rs. 1.5 crore

Annual Guarantee Fee – Credit Guarantee Fund Scheme for Micro and Small Enterprises

An annual guarantee fee will be charged on the guaranteed amount for the first year and on the outstanding balance in subsequent years for the tenure under the credit at a specified rate: –

  • 1% plus Risk premium in the case of credit facility up to Rs. 5 Lakh; and
  • 1.5%/1.35% plus risk premium in case of more than Rs. 5 Lakh and up to Rs. 50 Lakh
  • 1.8% plus risk premium for the credit facility of more than 50 Lakh and up to Rs. 2 crore
  • 2% plus risk premium for the credit facility of up to Rs. 1 crore for Retail and Wholesale Trades.

Post Office Tax Saving Scheme for Senior Citizen – Senior Citizen Savings Scheme (SCSS)

Guarantee Calculator – Click here

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