The biggest barrier to an MSME loan is usually collateral. CGTMSE removes it — the government guarantees the loan so the bank doesn't demand security. Here's how the scheme works.
CGTMSE is a credit-guarantee scheme: when a bank gives an eligible MSME a collateral-free loan, the trust guarantees a substantial share of it. If the borrower defaults, the trust compensates the lender for the guaranteed portion. This shifts risk off the bank, which is why it can lend without demanding property or deposits as security.
The scheme covers fund-based and non-fund-based facilities — term loans and working capital — to eligible micro and small enterprises, up to a ceiling that the government has progressively raised over the years. Because the covered amount and coverage percentage are revised periodically, the exact current limit and guarantee percentage should be confirmed against the latest CGTMSE circular at the time you apply.
In return for the guarantee, an annual guarantee fee (a percentage of the outstanding amount) is charged — the cost of borrowing without collateral. The rate varies by loan size and category. Crucially for Rajasthan units, this fee can be reimbursed under RIPS 2024, effectively making the guarantee free for the reimbursement period. The precise fee slabs follow the current CGTMSE guidelines.
The scheme is aimed at micro and small enterprises (as classified under the MSME definition) taking credit for a viable business activity, subject to some activity exclusions. A clean credit record and a fundable project matter more here than assets — which is the whole point. Confirm current eligibility and excluded activities against the latest scheme terms.
You don't apply to CGTMSE directly — you apply to a member lending bank for a collateral-free loan and the bank routes the guarantee through the trust. The strength of your file therefore matters: a sound DPR for a term loan, or CMA data for working capital, is what convinces the bank to lend on the project alone. See our detailed note on business loans without collateral.
Credit Guarantee Fund Trust for Micro and Small Enterprises — a trust set up by the Government of India and SIDBI that guarantees collateral-free loans to eligible MSMEs.
Up to a ceiling that the government has raised over time. Because it is revised periodically, confirm the current limit and coverage percentage against the latest CGTMSE circular when you apply.
Yes — an annual guarantee fee, a percentage of the outstanding amount, varying by loan size and category. In Rajasthan this fee can be reimbursed under RIPS 2024.
You apply to a member lending bank for a collateral-free loan; the bank routes the guarantee through the trust. A strong DPR or CMA is what secures the sanction.
We'll build the DPR or CMA that gets your bank to lend collateral-free under CGTMSE — and claim the fee reimbursement in Rajasthan. The first assessment is free.
Related reading: Business Loan Without Collateral · CGTMSE Fee Reimbursement (Rajasthan) · Working Capital Loan Guide · How to Prepare a DPR for a Bank Loan · What is CMA Data?
CA Nikhil Gupta structures CGTMSE-backed loans and claims the RIPS 2024 fee reimbursement in Rajasthan. Free assessment, no upfront fee.
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