CGTMSE Loan

CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) is a government initiative providing credit guarantee to lenders for collateral-free loans to MSMEs. It guarantees up to 85% of the loan amount, enabling banks to lend without collateral security.

Under CGTMSE, you can get collateral-free loans up to ₹5 crores (increased from ₹2 crores). For loans up to ₹5 lakhs, 85% guarantee coverage is provided, and for loans above ₹5 lakhs, 75% coverage is provided.

All new and existing MSMEs (Micro, Small, and Medium Enterprises) engaged in manufacturing, trading, or service activities can apply. The business must have Udyam/MSME registration and should be within the investment and turnover limits defined for MSMEs.

While collateral security is not required, lenders may ask for personal guarantee of the promoters/directors. However, even with personal guarantee, it provides significant advantage as you don't need to mortgage any property or assets.

Interest rates for CGTMSE loans typically range from 9.5% to 14% p.a. depending on the lender, loan amount, and borrower's credit profile. Rates are generally lower than unsecured loans due to the government guarantee backing.