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Credit Guarantee on Loans to Micro and Small Enterprises and New Entrepreneurs

Credit Guarantee on Loans to Micro and Small Enterprises and New Entrepreneurs

The Credit Guarantee Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India (GoI) to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme.

The Ministry of Micro, Small and Medium Enterprises, GoI and Small Industries Development Bank of India (SIDBI), have established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Scheme for Micro and Small Enterprises.

Eligibility & Conditions

  • Existing Micro, small and service Entrepreneurs & Aspiring Entrepreneur all are eligible

Nature of Scheme

  • The scheme is implemented by Credit Guarantee Trust for MSE (CGTMSE);
  • Credit guarantee for loans upto Rs. 2.00 crore, without collateral and third party guarantee;
  • Guarantee coverage ranges from 85% (Micro Enterprise up to Rs 5 lakh) to 75% (others);
  • Guarantee coverage made eligible to select NBFCs and Small Finance banks;
  • The extent of guarantee cover is 50% of the sanctioned amount of the credit facility for credit from Rs. 10 lakh to Rs. 100 lakhs per MSE borrower for retail trade activity.
  • The extent of guarantee cover is 80% for (i) Micro and Small Enterprises operated and/or owned by women; and (ii) all credits/loans in the North East Region (NER) for credit facilities upto Rs. 50 lakh.
  • In case of default, CGTMSE settles the claim with the lending institutions.

Steps for Availing the Assistance

  • Apply through Member Lending Institutions (MLIs- Banks and NBFCs).
  • List of MLIs are available at UDAAN

Last Modified : 2/8/2022



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