Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE)
Video Explanation & Insights
Credit Guarantee Fund Trust for Micro and Small Enterprises
The Credit Guarantee Scheme (CGS) is a flagship initiative of the Ministry of MSME, Government of India, and SIDBI. It enables collateral-free lending to micro and small enterprises (MSEs), ensuring access to finance for startups and established business units.
Under this scheme, financial institutions can extend credit facilities up to ₹5 crore without requiring third-party guarantees or collateral security, with CGTMSE providing the guarantee coverage.
Key Benefits of the CGTMSE Scheme
Borrowers can access business loans up to ₹5 crore without pledging land, buildings, or other collateral assets.
CGTMSE offers guarantee cover ranging from 75% to 85% of the loan amount, depending on the loan size, region, and category of the entrepreneur (with higher coverage for women, micro-enterprises, and projects in NE region).
The trust covers defaults up to the guarantee percentage, encouraging commercial banks and NBFCs to lend to emerging businesses.
Eligibility Criteria
Scheduled Commercial Banks, Regional Rural Banks, Small Finance Banks, SIDBI, NSIC, and selected NBFCs are eligible to extend CGTMSE loans.
Both new and existing Micro and Small Enterprises (MSEs) engaged in manufacturing or service activities (including retail/wholesale trade) are eligible. Retail and wholesale traders were made eligible by the Ministry of MSME office memorandum.