The government of India had recognized the emerging popularity of micro and small businesses, which played a considerable part in employing the country's population. It was estimated that over 26 million such MSEs were operational in the country and provided employment to around 60 million people.

That is why the government decided to implement plans to help these businesses secure capital for themselves by launching the Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE) scheme in the year 2000.

The CGTMSE scheme was a special endeavor by the government of India to help micro, small, and medium enterprises obtain loans without third-party collateral. This scheme aims to provide credit guarantees so that lending institutions can sanction loans for these budding businesses.

What is CGTMSE

The CGTMSE was launched in August 2000. It was an initiative of the government of India under the Ministry of Micro, Small and Medium Enterprises, and Small Industries Development Bank Of India (SIDBI). The CGTMSE full form is Credit Guarantee Trust Fund for Micro and Small Enterprises.

Salient features include -

A one-time guarantee CGTMSE fee of 1.5% for loans above Rs.5 lakhs and 1% for loans up to 5 lakhs will be levied by the government. Additionally, annual service fees of 0.75% and 0.5% will be charged on loans above and up to Rs.5 lakhs, respectively. For North East States, the one-time fee is levied at 0.75% for all.

Success of The CGTMSE Scheme

The government and The Ministry of Micro, Small and Medium Enterprises, and Small Industries Development Bank Of India(SIDBI) jointly contribute to this scheme in a 4:1 ratio. Till 2010, they contributed Rs.1906.55 crore towards the Credit Guarantee Fund Trust, which helped implement the CGTMSE scheme.

Since the launch of the scheme, the government has reached out to many small and medium businesses. According to the data provided by the government, it has approved over 3,00,000 proposals and has successfully covered around Rs.11550.61crore worth of credit. The scheme was able to help people across 35 states and union territories.

In the year 2000-2001, the first year from which the scheme was operational, around 951 proposals were approved, and credit coverage of Rs.606 lakhs was made. The scheme is still operating, and the government has been able to increase the approval numbers by 52%, taking it to 43 lakhs in the financial year 2020-2021. The total amount covered by the scheme stood at Rs.2.21 lakh crore.

Who is Eligible For The CGTMSE Scheme?

The CGTMSE scheme covers small and medium enterprises in most of the industrial sectors. Here are the CGTMSE scheme eligibility criteria for those who want to apply are -

Which Banks and Lending Institutions provide CGTMSE Loans?

You also need to know that not all kinds of lending authorities are allowed to file for CGTMSE scheme coverage. You cannot apply with CGTMSE for loans taken from private individuals or unrecognized lending institutions that CGTMSE does not mention. Mentioned below is a list of lending institutions that are recognized by the CGTMSE scheme:-

What Are The Documents Needed For CGTMSE Loan?

Here is a list of documents that you need to keep ready if you want to apply for a loan under the CGTMSE scheme:-

How to Apply For CGTMSE Loan?

Small and Medium enterprises seeking to avail of the scheme's benefits will have to apply for a CGTMSE loan separately. Here are the steps borrowers need to follow to apply for a loan with CGTMSE collateral coverage:-

Important Note: CGTMSE will only cover the collateral for a part of your loan. For the rest of the credit amount, you will have to produce some security coverage.

Limitations of the CGTMSE Scheme

Now that you know the eligibility criteria of CGTMSE loans, you also need to remember that there are certain limitations on who can claim the scheme and how it will work. Here are a few exceptions you need to keep in mind while applying for a CGTMSE loan:-

Special Benefits of CGTMSE Loans

While most CGTMSE scheme eligibility criteria apply to everyone, there are some exceptional cases in which CGTMSE may extend some unique benefits such as -


CGTMSE is an excellent scheme that the government has introduced to uplift MSEs in the manufacturing and service sectors. You need to check all the CGTMSE scheme eligibility criteria before applying for the loan to increase your chances of approval.

You also need to know how to apply for CGTMSE loans to make the process easier for you. Remember that any separate institution or agent does not operate the CGTMSE scheme. You need to go to their website to download the application and should submit it only to the lending institution from where you wish to take the loan.

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