What is the CGTMSE Scheme?
Micro and Small enterprises equal a huge chunk of our Indian economy. As the years are progressing; micro and small businesses and entrepreneurs are introducing innovative products and services. CGTMSE scheme is Credit Guarantee Trust Fund for Micro and Small Enterprises. The Government of India in association with SIDBI introduced the CGTMSE loan scheme. The scheme guarantees funds to lending institutions that provide loans to small and micro-enterprises. It is up to a certain limit. An initiative that allows lending institutions to provide CGTMSE loans to small and micro enterprises without the availability of collateral or security. Another objective of this scheme is to help small and micro establishments to thrive in the competitive market. Avail funds especially without the availability of collateral.
What is the lock-in period?
Before the lending institution puts up a claim on the trust, there is a lock-in period of 18 months. It is from either the date of the last disbursement of the loan to the borrower. Or the date of the guarantee cover coming into force in respect of the particular credit facility. So, the CGTMSE lock-in period of 18 months is there in the provision to ensure that the process influent and the lending institution’s fund security remains at stake.
Learn more about the CGTMSE scheme from FAQs.
The CGTMSE requires the following charges –
CGTMSE scheme Charges are not fixed. It depends on bank to bank or lending institutions.
This is done to ensure that the scheme works fine for both the lending institution and the borrowers. In this case, the borrowers are Micro and Small scale enterprises. They are the backbone of our Indian economy. Amid an economic slowdown, the government introduced this scheme along with SIDBI. This will provide the essential leverage to the borrower which can later enhance its enterprise.
1. Annual Service Fee (ASF)
Guarantee cover extended by Credit Guarantee Fund Scheme for loans provided before the date of 1st January 2013. In accordance with any specific borrower shall be valid only if the concerned Multilateral convention to implement tax passes. An annual service fee (ASF) of 0.50% on the amount guaranteed for credit facilities up to 5 lakh and 0.75% on the amount guaranteed for credit facilities over 5 lakh and up to 100 lakh.
2. Cost to the Borrower
The Credit Guarantee Scheme leaves it to the convenience of the MLIs to decide the annual service fee. Otherwise, they can also bear it themselves.
3. Borrower payable Interest rate
“Any credit facility which has been sanctioned by the lending institution (all scheduled commercial banks, selected financial institutions) and NBFCs. The maximum interest rate is not more than 14% p.a. and 18% p.a. respectively including the cost of guarantee cover.,” The interest rate shall not exceed the given parameters.
Process to apply for CGTMSE loan:
1. Commencement of the business organization
First and foremost is the starting of a company. What we mean is to register an enterprise under the Government of India. As this scheme cannot be availed unless the enterprise is a registered one.
2. Making a project or business report/description
This is extremely important. Because it portrays the potential of a business enterprise to function or a project which may turn out to be a profitable one. A good well has written descriptive report will ensure that there are no hurdles in making the most out of the CGTMSE scheme. The viability of the project acts as a major factor in availing this type of scheme, if the project is viable then the Government itself becomes ambitious toward the outcomes.
3. Get Coverage under CGTMSE scheme.
If you are an eligible candidate to avail of this scheme, this procedure is deemed to be completed by now, you must first check the CGTMSE eligibility according to your case.
Let’s understand the process from the CGTMSE case study.
Applying for the scheme:
Are you looking forward to avail and making the most out of this ambitious government initiative? Then, you must consider Terkar Capital for availing of the Unsecured Loan under CGTMSE. We are a trustworthy lending institution. Even if you are doubtful about the scheme, Don’t worry. The executives in Terkar Capital will explain to you the complete procedure, client privacy, and the requirements. We have been helping small and micro enterprises to flourish over the years.
Note: The eligibility criteria are common for applicants across India. However, there may be certain other kinds of criteria as well. They are to be met specifically by the region or the financial institution that is sanctioning the loan.
Apply for a Loan under CGTMSE
The application for the loan is to be made to the banks and financial institutions that are eligible to provide loans under the CGTMSE scheme. The government, as well as private banks, are involved in the scheme. It is spread out even to the rural areas. The application can be made only if the candidate is eligible for a loan under the CGTMSE scheme. The documents required for the processing of the loan will differ from case to case.
CGTMSE Loan at Terkar Capital
Are looking for a reliable agency to apply for CGTMSE Loan? No look further. Terkar Capital can be a trustworthy financial institution to reach out to. We provide assistance throughout the process. The borrower is known in detail about the CGTMSE scheme. Also helped in making the most suitable choice. We respect & keep the relations. It is so as to ensure that the borrower is satisfied with the loan and the services.