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CGTMSE Scheme : Indian Government Backs SMEs Without Collateral

If you are a small or micro enterprise struggling to get funding, it can be difficult to make ends meet. The rising rates of property, wages, operational expenses; all on top of trying to run a business, is a burden.

Why CGTMSE is Crucial to Business Banking?

For SMEs the biggest concern is getting funding, which can be made difficult by not having enough collateral. For solving this problem, the Government of India launched the Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme. The scheme allows the government to provide guarantees up to a sum of INR 1 Cr to any existing or new SME. If the SME is not able to pay the amount owed to the investor, the government will cover up to a maximum of 1 Cr without collateral.


To keep the business banking account flush with cash it is important to make profits and CGTMSE gives you the opportunity to do so. With the guarantee of Indian Government bailing you out, getting funding becomes a lot easier.

Straightforward Process for Applying

Another great feature of this scheme is that several Indian banks have participated in it, which makes the application process easier. The SME provides a business plan to the bank and can ask for CGTMSE coverage. Once the loan is approved, the bank itself will apply for CGTMSE scheme. When the government approves the coverage, the loan is covered up to 1 Cr by them. The bank and the SME, both benefit under CGTMSE scheme.

Small and Medium Enterprises are Taking Over

CGTMSE scheme is a conscious step taken by the Indian Government to encourage and foster small-time entrepreneurs in opening businesses successfully. In a growing economy, small businesses are of paramount importance. Their growth can prevent few big businesses from establishing a monopoly on the market. To empower the smallest businesses, additional considerations have been made for businesses. There are benefits to provide loans up to INR 2 Lakh for eligible women entrepreneurs, and borrowers situated in the North-Eastern Region of India. These entrepreneurs are especially in need of loan coverage and the Indian Government has obliged.


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