CGTMSE Loan scheme for MSMEs
The Government of India, through the Ministry of MSMEs in collaboration with the SIDBI, jointly established a trust CGTMSE. It was officially launched on 30th August 2000. Its primary objective is to offer credit guarantees to financial institutions that provide loans to MSMEs. Additionally, the CGTMSE scheme for MSMEs also encompasses partial collateral loans and retail trade, as part of the “Rebooting CGTMSE” initiative.
Overview
All the emerging businesses in India, be they micro, small, or medium are in constant need of finances. Whether it’s for expansion, purchasing heavy machinery, paying creditors, addressing working capital issues, or settling outstanding dues. Unfortunately, many of these businesses lack the financial knowledge needed to secure the funding they need. Hence, we at Terkar Capital come into the picture to provide consulting to help MSMEs raise required finances.
We have a variety of financial products, including secured and unsecured funding options. They are tailored to the specific needs of the borrower. For MSMEs, the CGTMSE loan scheme represents a promising source of funding and can be an excellent option to explore. The GOI has extended the credit limit to Rs 5 cr.
CGTMSE loan scheme Features
- The initiative was launched to help small businesses grow in a competitive market assist entrepreneurs in building their businesses and avail of collateral-free loans easily and conveniently.
- The scheme also aims at strengthening the credit lending facility to developing industries and helping them raise funds for the same.
- Being a collateral-free loan, the process is quite quick and convenient.
- It has the facility of guarantee cover for their lenders which will cover their loss in case of default by the borrower. The guarantee cover will exist until the total tenure of the loan credit.
- The CGTMSE coverage ranges from 70-85% in case of non-payment by the borrower.
- CGTMSE has a guarantee cover of 50 to 85% as per the diverse eligibility criteria.
- The maximum number of funds availed in this scheme is Rs. 500 Lacs.
- CGTMSE provides good guarantee covers to North East Region Women Entrepreneurs as well and encourages them to expand their businesses.
(The rate of interest may differ as per the market conditions)
Procedure for CGTMSE loan scheme
The crucial step is preparing the project report or a business plan. It has to be submitted to the lending company. Here the lending company will scrutinize whether the company is eligible under the scheme or not.
The lending institution or company will do a thorough investigation of the required documents and proceed with loans.
The lender will sanction your loan after duly verifying your documents.
Once the loan is sanctioned by the bank, the bank will apply to the CGTMSE organization and obtain CGTMSE loan scheme for MSMEs cover for the loan sanctioned. After obtaining the loan, the customer will have to pay services charges or fees as per the requirement.
Learn the process of CGTMSE Funding from the case study.
How much is CGTMSE fees?
The trust fund charges 1% p.a. of the amount so approved as fees:
- 0.75% – for loans of up to Rs. 5 Lakhs
- 0.85% for loans above Rs. 5 Lakhs but up to Rs. 100 Lakh.
The credit guarantee available below this scheme is 75/80% of the amount so transmitted to a maximum cap of Rs. 62.5 Lakh / 65 Lakh for a loan facility of up to Rs. 50 Lakhs. The percentage guarantee implies 85% for microenterprises for up to Rs. 5 lakhs. The guarantee percentage is 50% of the amount approved for a credit of above Rs. 50 Lakhs with a maximum limit of Rs. 100 Lakhs. The ownership of the guarantee is a block of 5 years.
Eligibility for CGTMSE (Borrower)
1. The applicant must be categorized as micro and small enterprises.
2. CGTMSE cover is available for Loans to Micro and Small Enterprises engaged in manufacturing or service activities.
3. CGTMSE cover is not available for loans to enterprises engaged in retail trade, educational institutions, training centres, self-help groups, and agriculture.
4. The business must have at least 3 years of continuity.
Eligible Lending Institution:
CGTMSE has designated Member Lending Institutions (MLI) which can provide loans to MSMEs. In this list, there are Government Banks, Scheduled Commercial Banks, Regional Rural Banks, NBFCs, Financial Institutions, etc. who have signed an agreement with the CGTMSE ministry.
Why Terkar Capital?
At Terkar Capital, we understand the financial needs of emerging businesses, especially MSMEs in India. Our goal is to provide personalized consulting services to help MSMEs secure the necessary funding for their expansion, machinery purchases, working capital, and more.
We offer a range of financial products, including secured and unsecured funding options, tailored to meet the specific requirements of borrowers. One attractive funding option for MSMEs is the CGTMSE loan scheme, which now offers an extended credit limit of up to Rs 5 crore.
I m looking for cgtmsme loan
Hello Mr. Sandeep,
Sure. We’ll facilitate the business loan under CGTMSE. We request you contact us using cell no – 7414973455 or by email – yes@terkarcapital.com.
Thank you