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How to Get loan Under CGTMSE Scheme? 

  • 23-Mar-2022
How to Get a loan Under CGTMSE Scheme? 

On 30th Aug 2000 the Government of India in collaboration with the Ministry of Micro Small and Medium Enterprises (MSME) and Small Industries Development Bank of India (SIDBI) initiated CGTMSE Scheme. The CGTMSE full form is Credit Guarantee Fund Trust for Micro and Small Enterprises that aims to provide credit solutions to SMEs and MSMEs. This scheme guarantees to cover default by the borrowers to repay the advance. All new and existing micro and small enterprises are eligible to apply for business loans.  

CGTMSE Scheme Cover  

To get your loan covered under CGTMSE Scheme you have to pay an additional guarantee fee and services charges. CGTMSE guarantee fee is payable at 1.5%. In case applying in the northeastern region, the state of Sikkim charges 0.75% on the credit facility agreed to covered by the credit guarantee fund scheme.  

Significantly, the annual service would be payable at 0.75% on the guaranteed amount. However, according to the policy package for stepping up credit to small and medium enterprises, public sectors are motivated to lessen the annual charges up to 0.25% for borrowers falling under the below categories.  

  • Loan requirement should not be more than Rs. 2 crores
  • Eligible women entrepreneurs can get scheme cover
  • Eligible borrowers located in northeastern region including the state of Sikkim and Jammu & Kashmir

The trust guarantees up to 75% of defaulted principal loan amount and up to 85% of the defaulted principal amount for selected borrowers category. For example, if you have availed 50 lakh credit facility then the maximum guarantee cap will be Rs.37.50 lakh.  

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Source: www.cgtmse.in  

How to Get loan Under CGTMSE Scheme?  

The aim objective of the CGTMSE Scheme is to provide financial assistance by giving more importance to project viability and business model validation. To cover up loans under the credit guarantee fund scheme, the borrower has to pay an additional guarantee fee as well as a service charge to the interest charged by the bank.   

To get a loan under CGTMSE without any collateral security/assets, the following are the procedures that need to be followed by borrowers:  

Formation of Business Entity  

At the very initial stage of the loan application, the borrower to incorporate a private limited company or proprietorship or limited liability partnership or one person company based on business nature and obtain required approval by executing projects.  

Prepare a Project Report for Business  

A thorough market analysis is essential for each business, doing so will help you to prepare a detailed project report for business loans. The business plan includes business model, promoter background, projected financials and other related information. Moreover, the project report must be prepared by professional industry experts. Once created, submit the same with the respective bank so that they can proceed for credit facility under the CGTMSE credit guarantee fund scheme.  

Get Sanction for Bank Loan  

Ensure you fill out the loan application form, submit necessary documents along with a business plan to the bank that provides the loan under CGTMSE Scheme. Generally, the request for bank loans contains term loans and working capital facilities. Thereafter, the bank conducts a deep analysis of your business viability and business to process the application and accord sanction as per the bank’s policy. The loan application form can be obtained by visiting its official website.  

Obtain CGTMSE Guarantee Cover  

Once your bank loan is sanctioned by the bank, the bank will apply to CGTMSE authorities and obtain the guarantee cover on behalf of borrower. If the loan gets approved by CGTMSE, the borrower has to pay a certain guarantee fee and services charges.  

List of Banks offering business loans under CGTMSE Scheme  

Axis Bank South Indian Bank 
Bank of Baroda Federal Bank 
Bank of India UCO Bank 
Bank of Maharashtra Union Bank of India 
Canara Bank United Bank of India 
Central Bank of India Yes Bank 
City Union Bank Kotak Mahindra Bank 
Dena Bank IndusInd Bank 
HDFC Bank Jamm & Kashmir Bank 
IDFC Bank Karnataka Bank 
ICICI Bank Oriental Bank of Commerce 
Indian Bank Punjab & Sind Bank 
Indian Overseas Bank Punjab National Bank 
SIDBI State Bank of India 

 Also Read:- A Complete Guide on Project Report for Bank Loan

 

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