Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE)
CGMSE was launched by the Indian government to provide collateral/security free loans to micro and small enterprise sector. A Trust was established by Ministry of MSMEs and Small Industries Development Bank of India (SIDBI) to implement this scheme. 80% of the fund is contributed by the government and remaining 20% is provided by SIDBI.
There are roughly 26 million micro and small enterprises (MSE) in India and it provides employment opportunities for more than 60 million people. The government understands that without a strong base of small industries, industrialization process will be tough to accelerate. Getting a loan for establishing a business remains a hectic jobs and many a times an idea didn’t get materialized due to this problem. However, this scheme provides an opportunity for the start-ups and entrepreneurs along with business units which are already established to turn your business idea into a reality.
Where to ask for the loan?
All the commercial banks (private/public/foreign) along with regional banks (sustainable viable- authorized by NABARD) will provide the loans.
- Both term loans and working capital facility up to INR 100 Lakh per borrowing unit without third party guarantee and collateral security.
- If the credit facility exceeds INR 50 Lakh, it may still covered under the scheme but guarantee scheme will be only for loan up to INR 50 Lakh.
- The loan can be made available from only one financial institution.
- The already established units covered under the respective state schemes can also avail this scheme provided that they fulfil other criteria.
- Small businesses in the retail sector are not eligible under this scheme.
- Guarantee fee and annual service fees needs to be paid by the applicants.
Guarantee fee: 1.5% of the loan amount
Annual service fee: 0.75%
- Only 75% of the sanctioned amount will covered under this scheme and in the case of enterprises owned by women, the guarantee cover is 80%.
What enterprises must have before applying under this scheme?
- Business Plan
- Know Your Customer (KYC) compliance
- Financial statement for the existing businesses.
- Pan Card.
How to avail?
Applicants can avail this loan from any authorized bank in India.
For more information, click here.