CGTMSE Fund

CGTMSE Fund

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a financial support scheme launched by the Government of India to facilitate credit flow to Micro and Small Enterprises (MSEs). The CGTMSE provides a credit guarantee to lending institutions against the default by MSE borrowers. Here are key points about the CGTMSE Fund:

The primary objective of CGTMSE is to encourage financial institutions, such as banks and non-banking financial companies (NBFCs), to extend credit facilities to micro and small enterprises without the need for collateral or third-party guarantee.

2. Credit Guarantee Coverage:

CGTMSE provides credit guarantee coverage to eligible loans granted by lending institutions to MSEs, covering both term loans and working capital facilities. The guarantee coverage extends to a portion of the defaulted principal amount.

3. Eligibility Criteria:

MSE borrowers, including both manufacturing and service enterprises, are eligible for coverage under CGTMSE. The scheme covers new as well as existing enterprises.

4. Maximum Loan Amount:

CGTMSE provides coverage for both term loans and working capital facilities up to a certain limit. As of my last knowledge update in January 2022, the maximum credit facility eligible for coverage is ₹2 crores for both manufacturing and service enterprises.

5. Guarantee Fee:

Lending institutions pay a one-time guarantee fee to avail the credit guarantee under CGTMSE. The fee is based on the amount of credit facilities covered and is intended to support the sustainability of the fund.

6. Risk Coverage:

The credit guarantee provided by CGTMSE covers a significant portion of the defaulted principal amount, reducing the risk for the lending institutions. This encourages them to extend credit to MSEs, even those without sufficient collateral.

7. Collateral-free Loans:

One of the key benefits of CGTMSE is that it enables MSEs to access credit without the need for collateral or third-party guarantees. This is particularly beneficial for small businesses that may have limited assets.

8. Application Process:

MSEs can apply for loans under the CGTMSE scheme through participating lending institutions. The application process involves submitting necessary documents and complying with the credit appraisal and approval procedures of the lending institution.

It's important to note that specific details of the CGTMSE scheme may be subject to changes, and the information provided here is based on my knowledge as of January 2022. Entrepreneurs and lenders interested in the CGTMSE scheme should refer to the latest guidelines and updates from the official CGTMSE website or relevant authorities.