Being a developing country, India has quite a number of micro and small enterprises. Considering this particular scenario of the Indian economy, the Government of India has introduced the CGTMSE Scheme. There are several perks to this scheme as well. It has benefitted most of these enterprises in building their business and renewing them.

There is much more to this scheme. The population of youth in India is known to be pretty high. It has even encouraged the aspiring entrepreneurs to give a push to their ideas and establish a firm. In India, there are mainly manufacturing companies that fall under the Micro and Small Enterprises. This is a sector where this scheme has majorly demonstrated its good work.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), introduced by the Government of India, is a scheme that aims at aiding Indian firms that are in their initial phases or fall under the MSE. Launched in 2000, the scheme focuses on providing credit guarantee to financial institutions providing loans to MSMEs. Under the CGTMSE scheme, the applicant owning an MSE is provided with a CGTMSE loan that does not require the applicant businessperson to possess collateral. Although, there are certain eligibility criteria that the candidate needs to match.

Features and Objectives

  • The CGTMSE scheme has been introduced by the Government of India and SIDBI (Small Industries Development Bank of India) to help the first generation entrepreneurs to erect their businesses.
  • The scheme also aims at strengthening the credit lending facility overall.
  • ‘Hybrid Security’ is a product introduced under the scheme which allows the borrower to get guaranteed cover on that portion of the credit facility which is not covered by the collateral security.
  • There will still be charges for primary and collateral security.
  • The primary objective of the scheme is that the lender realises the importance of the project and its viability to secure it with a credit facility.
  • The initiative was launched to help small businesses to grow in a competitive market. 
  • The scheme lets people with minimal or no experience of setting up a business to acquire a credit cover. 
  • The credit facility is based on the primary security and other financial assets.
  • The guarantee cover will exist until the total tenure of the loan credit. 
  • The scheme directs at making it easy for the borrower to acquire term loans as well as working capital utilities from the same organization.

Eligibility Criteria for CGTMSE Loan

The parameters to be met by the applicant to acquire a loan under this scheme are listed under the CGTMSE scheme eligibility criteria. Also, remember that these criteria may differ from case to case. Some of the essential criteria are given as follows:

  • The applicant must own a business that can be categorized as a Micro and Small Enterprise.
  • Even small and medium-sized manufacturing units are eligible under the same.  CGTMSE scheme.
  • Business must have at least 3 years of business continuity. 
  • All types of manufacturing and service sector companies can avail of this facility. 

Note: The eligibility criteria are common for applicants across India. However, there may be certain other kinds of criteria as well that are to be met specifically to the region or the financial institution that is sanctioning the loan.


Applying for a CGTMSE Loan

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. 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 processing of the loan will differ from case to case. The general steps in acquiring a loan under the CGTMSE scheme can be listed as follows-

  • Start your business

This includes registering your business, starting the required bank account, and completing other formalities to start your business.

  • Prepare a project report

This is extremely crucial as the chances of your loan getting approved will significantly depend on this. You will have to provide a thorough business plan with all the required details.

  • Apply for the sanction of loan

Along with the project report, visit a reputed financial institution or bank to apply for your loan.

  • Get the CGTMSE coverage

Once your loan is sanctioned, the institution or bank will apply to the respective CGTMSE scheme. Upon approval, you can acquire the loan by paying the necessary service charges and CGTMSE charges.

CGTMSE Loan at Terkar Capital

If you are looking for a reliable agency to apply for a CGTMSE loan, Terkar Capital can be a trustworthy financial institution to reach out to. The providers are authentic and along with the loan, assistance is also provided. The borrower is known in detail about the CGTMSE scheme and is helped in making the most suitable choice. The relationship is maintained even after the loan so as to ensure that the borrower is satisfied with the loan and the services.

Documents Required

The requirement of the documents varies from lender to lender and from case to case. However, in all the scenarios there are the standard set of the documents. Those are as follows.

  • KYC Documents
    • A copy of PAN Card.
    • Proof of Address: (Passport Copy / Aadhaar Card / Electricity Bill / Registered Rent Agreement)
    • Statutory documents: In the case of Proprietary Firm: Shop Act, GST Registration Certificate, Udyog Aadhaar Memorandum, VAT Registration, GST certificate other Registrations Applicable.
    • Statutory documents: In the case of Private / Public Limited Company/One Person Company: MOA & AOA, Certificate of Incorporation, Certificate of commencement of business in case of a public limited company, GST Registration Certificate, Shop Act, Udyog Aadhaar Memorandum, VAT Registration and other Registrations Applicable.
    • Statutory documents: In the case of Partnership Firm: Registered Partnership Deed, In Case of LLP: LLP Agreement, Shop Act, Udyog Aadhaar Memorandum, GST Registration Certificate, VAT Registration and other Registrations Applicable.
  • Income Documents
    • Last 3 years Financials (IT Returns, Computation Sheet & Balance-sheet) and Proof of turnover vide latest sales/service tax returns and Invoice / Purchase Order Copy (for the loan against receivables)
    • Last 1-year bank statement of all operative bank account.
    • Details of all existing loans: Sanction Letter and Loan Account Statement for last 1 year.
  • Property Documents
    • Previous & current sales deed
    • Plant & machinery list
    • Plant & machinery current valuation report
    • Margin money
    • Property photographs
    • Previous property search & valuation report

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