Scheme Overview

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), established under the Ministry of Micro, Small and Medium Enterprises, provides a guarantee cover of 75 % to 85 % on defaulted loans extended by participating banks and financial institutions. The guarantee is applicable to both term loans and working‑capital facilities, with a maximum sanctioned amount of Rs. 5 crore per borrower.

Objectives

To broaden financial inclusion for MSEs by mitigating credit risk for lenders, thereby encouraging the extension of credit without the requirement of collateral or third‑party guarantees.

Coverage

Guarantee cover is available for new as well as existing enterprises engaged in manufacturing or service activities, provided they satisfy the MSME definition (investment in plant & machinery ≤ 10 crore and turnover ≤ 50 crore for small enterprises; ≤ 1 crore and ≤ 5 crore respectively for micro enterprises).

1. Identify a participating bank or financial institution.
2. Submit the standard loan application along with the CGTMSE guarantee request form.
3. The lending institution forwards the guarantee request to CGTMSE.
4. CGTMSE evaluates eligibility and issues the guarantee cover, subject to compliance with scheme guidelines.
5. Upon approval, the loan is disbursed to the enterprise.