The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a flagship initiative of the Government of India, launched in 2000 by the Ministry of MSME and SIDBI (Small Industries Development Bank of India). This scheme provides credit guarantees to financial institutions for loans extended to Micro and Small Enterprises (MSEs) without the need for collateral.
Objective of CGTMSE
- To promote entrepreneurship and encourage banks and financial institutions to offer collateral-free credit to Micro and Small Enterprises.
- To make formal finance accessible to first-time business owners, startups, and small units that lack assets or security.
Who is Eligible?
Eligible Borrowers:
- All new and existing Micro and Small Enterprises (MSEs), including manufacturing and service enterprises.
- Retail trade is now also included under revised guidelines.
Eligible Lenders:
- All Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, NBFCs, and select financial institutions registered under the scheme.
Loan Coverage Under CGTMSE
- Loan Amount Covered: Up to ₹5 crore
- Guarantee Coverage:
Up to 85% for micro-enterprises (loans up to ₹5 lakh)
75% to 80% for other eligible borrowers depending on category
50% for retail activities (non-manufacturing/service)
- Tenure of Guarantee: Up to 5 years
No Collateral
No Third-Party Guarantee
Lower Risk for Lenders
Documents Required
To avail of a CGTMSE backed loan, the borrower must:
- Prepare a detailed project report or business plan
- Submit basic KYC documents (Aadhaar, PAN, GST)
- Provide financial statements, if available
- Submit documents required by the lending bank
How to Apply?
Choose a Bank or NBFC: Approach any bank or financial institution registered under the CGTMSE scheme.
- Prepare Business Plan: Include estimated costs, income projections, and purpose of the loan.
- Bank Evaluates Application: Bank assesses creditworthiness and feasibility.
- Bank Applies to CGTMSE: If approved, the bank seeks credit guarantee coverage.
- Loan is Sanctioned: Once the CGTMSE backs the loan, the funds are disbursed.
- You do not need to apply separately to CGTMSE as the bank does this on your behalf.
Key Benefits of CGTMSE
- Boosts access to credit for micro & small businesses
- Reduces dependency on informal credit sources
- Encourages entrepreneurship by lowering financial barriers
- Supports women, SC/ST entrepreneurs, and businesses in backward areas
- No collateral means safer and easier funding access for small business owners
Important Points to Know
- Banks may charge a guarantee fee and annual service fee (usually 1–2%)
- Only new and viable business proposals are eligible
- Defaulting on loan repayment may result in blacklisting, despite the guarantee
Official Portal and More Information
You can find more or track your lender’s eligibility through the official site:
👉 https://www.cgtmse.in/
Conclusion: Enabling Financial Inclusion
CGTMSE is a game-changer for first-time entrepreneurs and small business owners in India. It removes one of the biggest hurdles, the need for collateral, and paves the way for inclusive growth and economic empowerment.
