What is CGTMSE Scheme?

August 30, 2018by Team CapitaWorld0
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Mumbai-based businessman Mr Bhavesh Joshi required funding for business expansion and hence, he approached a Bank. He was discouraged when he was asked to submit a long list of documents and provide collateral to avail loan. Moreover, the loan approval process was slow.

To start as well as manage an existing business, owners require adequate and timely funds. At times financiers are reluctant to extend loans to small and medium enterprises as they are perceived as a risky venture.

To cater to debt funding needs of these enterprises, Ministry of MSME has launched Credit Guarantee scheme to facilitate credit flow to the MSE (Micro and Small Enterprises) sector.

CGTMSE Scheme

Background: Government of India and SIDBI has set up the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) to provide easy access to working capital and/or term loans to deserving individuals as well as businesses.

Main objective of the scheme is to offer credit facility purely on project viability and considering primary security of the assets financed. The scheme assures to make good the loss incurred by lender(s) in case of default from MSE unit upto 85% of credit facility.

The amount of repayment depends on the amount of loan borrowed, type of borrower (male or female) and the purpose of the loan.

(Source: https://www.cgtmse.in)

Eligibility Criteria (Borrowers):

Existing and New MSEs engaged in manufacturing as well as services sector are eligible to apply under the scheme

Nature of Assistance:

Both fund-based and non-fund based (LOC, Bank Guarantee) collateral free credit facilities up to Rs 2 Crore per eligible SME are covered under the scheme. To avail facility, the eligible borrower needs to pay annual guarantee fee. The guarantee cover available under the CGTMSE scheme is to the extent of 50%/ 75% / 80% / 85% of the sanctioned amount of the credit facility.

Process:

As an entrepreneur having new business idea or a business owner having new project plan, one needs to follow simple steps as shown below to avail credit facility under CGTMSE scheme.

Fees and Interest Rate:

The borrowers are expected to pay an annual guarantee fee as per below fee structure:

(Source: https://www.cgtmse.in/Fees.aspx)

Application Process:

Eligible enterprises may approach the Member Lending Institutions (MLIs) directly and follow Lender processes and policies under the Scheme.
For more information, please read https://www.cgtmse.in/List_Of_MLIs.aspx

For Latest Information:

https://cgtmse.in/news_and_features.aspx


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