CGTMSE Loan Scheme
Micro and Small enterprises equal a huge chunk of our Indian economy. As the year progresses, micro and small businesses and entrepreneurs are introducing innovative products and services. CGTMSE loan scheme is a Credit Guarantee Trust Fund for Micro and Small Enterprises. The Government of India in association with SIDBI introduced the CGTMSE loan. The scheme guarantees funds to lending institutions that provide loans up to 5 Crores to small and micro-enterprises. It is up to a certain limit.
CGTMSE is an initiative that allows lending institutions to provide credit facilities 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.
CGTMSE 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 from the CGTMSE scheme from FAQs here.
CGTMSE Loan Scheme Charges:
The CGTMSE requires the following charges –
CGTMSE loan scheme Charges are not fixed. It depends on bank-to-bank or lending institutions.
This is done to ensure that the loan 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 essential leverage to the borrower which can later enhance its enterprise.
1. Annual Service Fee
Guarantee cover extended by Credit Guarantee Fund Scheme for loans provided before the date of 1st January 2013. Following 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 that 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 Scheme:
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 that may turn out to be a profitable one. A good, 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 of the CGTMSE from the case study.
Eligibility criteria
Are you looking forward to availing and making the most out of this ambitious government initiative? Then, you must consider Terkar Capital for availing of the 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 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.
How to Apply for a Business 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 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
We are a reliable lending institution, that assists small and micro enterprises in taking advantage of this government initiative. The scheme provides a guarantee to lending institutions, allowing them to offer loans to enterprises without collateral. Eligible candidates can apply for the CGTMSE loan by meeting the required criteria and submitting the necessary documents to the eligible banks or financial institutions participating in the scheme. Let’s Apply at Ease with Terkar Capital.
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