The Genesis:

First generation entrepreneurs often find it highly challenging to raise funds required for starting their venture. Additionally, they are unable to avail credit from banks and other financial institutions due to lack of collaterals and/or third-party guarantees.

To overcome these difficulties, the Ministry of Micro, Small and Medium Enterprises (MSME) launched the Credit Guarantee Scheme (CGS) to facilitate the flow of credit to micro, small and medium enterprises. The Government of India along with SIDBI launched the Credit Guarantee Fund Trust for Micro and Small Enterprises, shortly known as CGTMSE.

Two primary objectives of CGTMSE:

1. The lender emphasizes project viability while providing credit to the borrower and not the security.
2. Lenders must provide composite credit to the borrower that includes both working capital and term loan.

In the unfortunate event that the MSE unit is unable to repay the loan, the Guarantee Trust will bear the loss and repay the credit to the lender up to 50/75/80/85 percent of the loan.

What is the CGTMSE Scheme?

It’s a unique product that aims to bridge the gap between funds where collaterals are not available. It offers financial support to budding entrepreneurs to help them realize their financial dreams on a nominal  Insurance premium.

Under the CGTMSE scheme, businesses can apply for loans up to 1crores. What makes the CGTMSE different from regular business loans is that the government of India provides the Credit Guarantee. Under this scheme, borrowers can borrow up to 85% of the project cost as a loan.

Eligibility Criteria

The primary objective of this loan offer is that micro and small business owners gain easy access to funds. Here are the main criteria for borrowers under this scheme:

• Loans are available to both existing and new borrowers.
• Borrowers must provide a detailed and feasible business plan to avail funding under this scheme.
• The business should meet all the registration rules in place.

Loan Limit

The maximum loan amount a person can borrow using the CGTMSE scheme is 100 lakhs (1 Cr). The amount of loan sanctioned to you under this scheme depends on collaterals, third-party guarantee, and the proposed business plan.

Fees to be Paid

Guarantee Fee

Borrowers have to pay a one-time guarantee fee of around 1.5% of the loan sanctioned (this includes both term loan and working capital) to the CGTMSE. The guarantee fee is set at 0.75% of the total loan amount for borrowers from the North-Eastern regions.

Annual Service Fee

Banks have to pay a yearly service fee of 0.75% of the total sanctioned limit to the CGTMSE on 31st March of every year. The credit guarantee cover provided by the CGTMSE is valid only when the annual service fees are paid duly.

Why Choose AKT Associates to apply for CGTMSE scheme?

• Experience – We have handled over 2 lakh assignments of all sizes from start-ups to corporate. We have experience in providing you with the best assistance.
• Expertise – Our diverse team of professionals includes CAs, financial experts, legal advisors, and technical staff, who provide you with the best professional guidance every step of the way.
• Excellent Customer Support – We pride ourselves on delivering exceptional customer service. Be it helping you handle complicated application forms or solving even minor technical issues; we are there for you.