CGTMSE Scheme in India: Empowering Small and Micro Businesses


The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a pivotal initiative jointly established by the Government of India and the Small Industries Development Bank of India (SIDBI). The scheme’s primary objective is to provide a safety net in the form of guarantee cover to collateral-free credit facilities granted by eligible lending institutions to micro and small enterprises (MSEs). Introduced in 2000, this scheme plays a vital role in amplifying credit availability for MSEs, thereby supporting their operational and financial needs.

Eligibility Criteria for the CGTMSE Scheme

The CGTMSE scheme extends its wings to encompass a broad spectrum of MSEs, encompassing small-scale industries, micro enterprises, and tiny enterprises. To be eligible for the scheme, an MSE must meet the following criteria:

  • MSME Registration: The enterprise must be registered with the Ministry of Micro, Small and Medium Enterprises (MSME).

  • Turnover Thresholds: Depending on the category, the MSE should possess a minimum annual turnover of ₹25 lakh (for small-scale industries) or ₹10 lakh (for micro enterprises and tiny enterprises).

  • Positive Net Worth: The enterprise should maintain a positive net worth, reflecting its financial stability.

  • Loan Default Status: The enterprise must not be in default of any existing loan or credit facility

Guarantee Cover under the CGTMSE Scheme

The guarantee cover rendered by the CGTMSE scheme extends up to 85% of the sanctioned credit facility amount. Remarkably, this coverage is more extensive for micro enterprises and loans amounting to ₹5 lakh or less.
Fees and Charges in the CGTMSE Scheme

The CGTMSE scheme involves two key charges:

  • Guarantee Fee: This one-time fee, calculated as a percentage of the sanctioned loan amount, is paid to CGTMSE by the lending institution upon loan approval.
  • Risk Premium: Charged on a recurring monthly basis, the risk premium is also calculated as a percentage of the outstanding loan amount. It constitutes an ongoing cost associated with the guarantee cover.

Availing the CGTMSE Scheme

To access the CGTMSE scheme, an MSE must follow these steps:

  • Approach Eligible Lending Institution: The MSE should initiate contact with an eligible lending institution.
  • Assessment of Eligibility: The lending institution evaluates the MSE’s eligibility for the scheme.
  • Loan Sanction and Guarantee Cover: Upon approval, the lending institution sanctions the loan and secures the guarantee cover from CGTMSE.

Benefits Encompassed by the CGTMSE Scheme

The CGTMSE scheme extends several advantages to MSEs:
  • Enhanced Credit Access: The scheme’s guarantee cover simplifies the process of securing credit from lending institutions.
  • Favorable Interest Rates: MSEs with CGTMSE-backed loans may enjoy reduced interest rates, promoting affordability.
  • Reduced Collateral Requirements: Collateral-free loans become attainable for MSEs, aiding in circumventing stringent collateral demands.
  • Improved Financial Health: Elevated credit access and lowered interest rates can contribute to improved financial performance for MSEs.

In the landscape of MSEs seeking financial support, the CGTMSE scheme emerges as a beacon of opportunity. Through its comprehensive guarantee cover and accommodating terms, it empowers MSEs to pursue their aspirations, bolster economic growth, and establish a solid financial footing. If you are an MSE aiming to secure financing, the CGTMSE scheme stands as a compelling avenue well worth exploring.

For more information on CGTMSE loan eligibility, application procedures, interest rates, the application process, necessary documents, benefits, and contact details, please visit the official CGTMSE portal or contact the provided helpline.

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