The Credit Guarantee Fund Scheme

Banks usually avoid providing loans to street vendors, shopkeepers, truck drivers and taxi operators, etc.

This is because they cannot provide collateral for their ventures.

The Credit Guarantee Fund Scheme offers guarantees to banks, RRBs, Small Finance Institutes and NBFCs so that they can provide loans to owners of MSMEs without collateral.

The Ministry of MSME and SIDBI created a trust fund that finances the Credit Guarantee Fund Scheme called Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

CGTMSE Loans are provided through its Member Lending Institutions.

A list of all MLIs as of November 2020 are attached in this link.

Extent to which guarantees are extended per loan amount.

Note: Subject to change as per policy review

Category Maximum extent of Guarantee where credit facility is
Micro Enterprises Up to ₹ 5 lakh Above ₹ 5 lakh & up to ₹ 50 lakh Above ₹ 50 lakh & up to ₹ 200 lakh
85% of the amount in default subject to a maximum of ₹ 4.25 lakh 75% of the amount in default subject to a maximum of ₹ 37.50 lakh 75% of the amount in default subject to a maximum of ₹150 lakh
Women entrepreneurs/Units located in North East Region (incl. Sikkim) (other than credit facility up to ₹ 5 lakh to micro enterprises) 80% of the amount in default subject to a maximum of ₹ 40 lakh
MSME Retail Trade (from ₹10 lakh up to ₹100 lakh) 50% of the amount in default subject to a maximum of ₹ 50 lakh
All other eligible category of borrowers 705% of the amount in default subject to a maximum of ₹ 150 lakh

Newer schemes through CGTMSE portal:

Newer schemes through CGTMSE portal:

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    Points to remember

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    The MSME 59 minute loan scheme seeks to provide hassle-free loans with minimum paperwork within an hour!

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    The Credit Guarantee Fund Scheme can offer loans to street vendors, shopkeepers, truck drivers and taxi operators, etc.,

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    The Credit Guarantee Fund Scheme offers guarantees to banks, RRBs, Small Finance Institutes and NBFCs so that they can provide loans to owners of MSMEs without collateral

Let's move forward with the National Small Industries Corporation Subsidy

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