Credit Guarantee fund Trust for micro & Small business
28/12/2021 1 By indiafreenotesThe Credit Guarantee Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India (GoI) to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme.
The Ministry of Micro, Small and Medium Enterprises, GoI and Small Industries Development Bank of India (SIDBI), have established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Scheme for Micro and Small Enterprises.
Eligibility/Applicability
New as well as existing Micro & Small Enterprises. Guarantee coverage ranges from 85% (For Micro Enterprise up to Rs 5 lakh) to 75% (For others). 50% coverage is for Retail Activity
Nature of Assistance
The credit facilities which are eligible to be covered both for term loans and/or working capital are collateral free. Loan up to a limit of Rs. 200 lakh is available for individual MSE on payment of guarantee fee to bank by the MSE.
Scheme Benefits & Highlights
- Fund and non-fund based (Letters of Credit, Bank Guarantee etc.) credit facilities up to Rs 200 lakh per eligible borrower are covered under the guarantee scheme provided they are extended on the project viability without collateral security or third party guarantee.
- The guarantee cover available under the scheme is to the extent of 50%/ 75% / 80% & 85% of the sanctioned amount of the credit facility. The extent of guarantee cover is 85% for micro enterprises for credit up to Rs 5 lakh. The extent of guarantee cover is 50% of the sanctioned amount of the credit facility for credit from Rs 10 lakh to Rs 100 lakh per MSE borrower for retail trade activity.
- The extent of guarantee cover is 80%(i) Micro and Small Enterprises operated and/or owned by women; and (ii) all credits/loans in the North East Region (NER) for credit facilities upto Rs 50 lakh. In case of default, Trust settles the claim up to 75% of the amount in default of the credit facility extended by the lending institution for credit facilities upto Rs 200 lakh.
Category | Maximum extent of Guarantee where credit facility is | ||
Upto 5 lakh | Above 5 lakh upto 50 lakhs | Above 50 lakh upto 200 lakhs | |
Micro Enterprises | 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 upto 5 lakhs to micro enterprises) | 80% of the amount in default subject to a maximum of 40 lakh | ||
All other category of borrowers | 75% of the amount in default subject to a maximum of 37.50 lakh | ||
Activity | From 10 lakh upto 100 lakh | ||
MSE Retail Trade | 50% of the amount in default subject to a maximum of 50 lakh |
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