Business is a journey that is not always easy, especially when it comes to managing money. Many small business owners and startups often struggle to get loans because banks usually ask for collateral like property or land. To solve this issue, the government launched the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for entrepreneurs and business owners. This scheme allows them to get loans without pledging any security.
If you are looking for a small business loan, here is your read. In this brief blog, we will understand what is the CGTMSE scheme, its eligibility, interest rates, benefits, and how you can apply.
What Does CGTMSE Stand For?
As mentioned earlier, the full form of CGTMSE is Credit Guarantee Fund Trust for Micro and Small Enterprises. It was set up by the Government of India and SIDBI (Small Industries Development Bank of India) in the year 2000. Its purpose is to provide collateral-free loans to micro and small businesses. With this, you do not need to mortgage your house, shop, or machinery to get a loan. Under this, the government itself becomes the loan guarantor.
Purpose and History of the CGTMSE Scheme
The main goal of the CGTMSE scheme is to support small businesses and startups that do not have any collateral to provide but need financial help. Back in the day, many entrepreneurs could not actually grow their businesses because banks refused loans without security. This problem is now solved with the launch of the CGTMSE scheme.
Now, banks are willing to lend as the government covers most of the risk. Since its launch, this scheme has helped lakhs of businesses and encouraged entrepreneurship across the country.
Key Features & Benefits of CGTMSE Scheme
Here are some key features and benefits of the scheme:
- The CGTMSE loans are collateral-free, and there is no need to provide security.
- You can get term loans and working capital loans of up to ₹5 crore.
- A one-time guarantee fee is charged.
- The scheme guarantees a coverage of 75% to 85% of the defaulted loan amount.
- Competitive interest rates
- No direct contribution from borrowers required
- Available through most banks and NBFCs.
Eligibility Criteria of CGTMSE
There are certain CGTMSE scheme eligibility criteria a business must meet to get the loan:
- The business must be a new and existing Micro and Small Enterprise (MSE).
- Your business type should be covered within the scheme. Usually, both manufacturing and service units are covered (except agriculture, retail trade, and SHGs).
- The business must follow all legal and regulatory rules.
Interest Rate Structure & Guarantee Fees
The CGTMSE loan interest rate may vary as it is decided by the bank or the financial institution. However, it may range between 10% and 14%.
The Annual Guarantee Fee (AGF) ranges between 0.37% and 1.35% of the loan amount per year. Here’s the table for your reference:
| Loan Amount | CGTMSE Charge |
| Up to ₹10 Lakhs | 0.37% |
| Above ₹10 Lakhs to ₹50 Lakhs | 0.55% |
| Above ₹50 Lakhs to ₹1 Crore | 0.60% |
| Above ₹1 Crore to ₹2 Crore | 1.20% |
| Above ₹2 Crore to ₹5 Crore | 1.35% |
How to Apply for CGTMSE Loans
Here’s how you can apply for a CGTMSE loan:
Step 1: Collect all documents, including KYC papers, business registration, financials, and project report (CGTSE loan documents).
Step 2: Approach a bank, NBFC, or lender that offers CGTMSE loans.
Step 3: Complete the documentation process and submit your loan application.
Step 4: Wait for evaluation and approval.
Step 5: Once approved, the bank applies for CGTMSE cover.
Step 6: The loan is sanctioned and disbursed.
Recent Updates & Innovations (2025)
In 2025, the CGTMSE scheme has improved. Here’s how:
- Higher loan limits and coverage (raised from ₹5 crore to ₹10 crore).
- For loans crossing ₹1 crore, the Annual Guarantee Fee (AGF) has been lowered.
- CGTMSE has embraced AI-based risk-assessment tools, thereby reducing approval time.
- Priority to new sectors like green energy, manufacturing, and technology.
- Other innovations include special provisions for informal micro enterprises, enhancements for women, transgender, and SC/ST.
Meanwhile, if you need quick financial support to manage your household expenses and emergency bills, then you can avail instant personal loans of up to ₹3 lakh. Just download the CASHe app, apply online, and get the loan approved within minutes.
