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How-to-get-a-Business-Loan-under-CGTMSE-Scheme-without-Collateral

How to get a Business Loan under CGTMSE Scheme

How to get a Business Loan under CGTMSE Scheme without Collateral

The CGTMSE Scheme is an important scheme that every Indian Entrepreneur and Business Owners must know about and understand. To start and manage a business, the availability of an investment in the form of debt or equity is a must and CGTMSE scheme provides easy access to debt funds. In this article, we look at the CGTMSE Scheme in detail and the process for obtaining a bank loan without collateral:

CGTMSE Organization

Availability of bank loan without any collateral is a major requirement for boosting first Generation Entrepreneurship in India. To help millions of first-generation Entrepreneurs start their business with a bank loan (without the hassles of collateral), the Ministry of Micro, Small & Medium Enterprises (MSME) launched the CGTMSE Scheme. The CGTMSE scheme or Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is operationalized by SIDBI and the Government of India.

CGTMSE Scheme

The main objective of the CGTMSE scheme is that banks should give importance to project viability or business model validation and secure the loan facility only based on the assets financed by the bank loan. In the event a Micro or Small Business (MSME), which availed loan under the CGTMSE scheme, fails to repay the loan commitment to the bank, the CGTMSE organization would make good the loss incurred by the bank up to 85% of the credit facility.

Under the CGTMSE scheme, a bank loan of up to Rs.1 crore provided to a startup or an existing business in the form of term loan or working capital or both can be covered. Businesses in the manufacturing sector and service sector are eligible. However, retail trade, educational institutions, agriculture, Self Help Groups (SHGs) and training institutions will not be eligible to obtain a loan under CGTMSE Scheme.

CGTMSE Scheme Cover

For a loan to be covered under the CGTMSE Scheme, the borrower is required to pay an additional CGTMSE Guarantee and CGTMSE Service fee on top of the interest rate charged by the Bank. Presently, CGTMSE guarantee fee is payable at 1.5% (0.75% in case of North Eastern Region including the state of Sikkim) on the credit facility agreed to be covered by the CGTMSE Scheme.  Similarly, the CGTMSE annual service fee would be payable @0.75% on the guaranteed amount. However as per the “Policy package for stepping up credit to Small and Medium Enterprises“, Public Sector Banks are encouraged to absorb the Annual Service Fee in excess of 0.25% p.a. for all the borrowers falling under the following categories:

  1. Loans of up to Rs. 2.00 lakh;
  2. Loans provided to eligible women entrepreneurs;
  3. Loans provided to eligible borrowers located in the North Eastern Region (including the State of Sikkim) and Jammu & Kashmir.

How to get Loan under CGTMSE Scheme

To get a loan under CGTMSE Scheme without any collateral security, the following steps must be followed:

Process-for-getting-bank-loan-under-CGTMSE-Scheme
Process for getting bank loan under CGTMSE Scheme

Business Entity Formation

Prior to applying for a loan under the CGTMSE Scheme, incorporate a Private Limited Company or LLP or One Person Company or Proprietorship, as per the requirements of the business and obtain the necessary tax registrations and approvals for doing business / executing the project.

Prepare Business Plan or Project Report

Conduct a market analysis for the market and prepare a business plan or project report containing information like business model, promoter profile, projected financials, etc., It is important that the business plan or project report is prepared by professionals with prior experience, as “The main objective of the CGTMSE scheme is that banks should give importance to project viability or business model validation and secure the loan facility without any collateral.”. IndiaFilings can help you prepare a business plan or project report as per the CGTMSE Scheme.

Obtain Sanction for Bank Loan

Submit the business plan or project report with the necessary banks that provide loan under CGTMSE Scheme and request for sanction of bank loan from Banks providing loan under CGTMSE Scheme. The request for a bank loan can contain term loan and working capital facilities. The banks will process the loan application and accord sanction as per the Bank’s policy.

Obtaining CGTMSE Cover

Once the bank loan is sanctioned by the Bank, the bank will apply to CGTMSE organization and obtain CGTMSE scheme cover for the loan sanctioned. Once approved by the CGTMSE organization, the loan will be under the CGTMSE scheme and the borrower will be required to pay the CGTMSE guarantee and CGTMSE service fee.

Note: To obtain a loan under CGTMSE Scheme, visit IndiaFilings.com and talk to an IndiaFilings Loan Advisor.

List of Banks providing business loan under CGTMSE Scheme

  1.  Allahabad Bank
  2. Allahabad UP Gramin Bank
  3. Andhra Bank
  4. Andhra Pradesh Grameena Vikas Bank
  5. Andhra Pradesh State Financial Corporation
  6. Andhra Pragathi Grameena Bank
  7. Aryavart Gramin Bank
  8. Assam Gramin Vikash Bank
  9. Axis Bank Limited
  10. Baitarani Gramya Bank
  11. Ballia Etawah Gramin Bank
  12. Bangiya Gramin Vikash Bank
  13. Bank of Bahrain and Kuwait
  14. Bank of Baroda
  15. Bank of India
  16. Bank of Maharashtra
  17. Barclays Bank Plc
  18. Baroda Gujarat Gramin Bank
  19. Baroda Rajasthan Gramin Bank
  20. Baroda Uttar Pradesh Gramin Bank
  21. Bharatiya Mahila Bank
  22. Bihar Kshetriya Gramin Bank
  23. Canara Bank
  24. Catholic Syrian Bank
  25. Cauvery Kalpatharu Grameena Bank
  26. Central Bank of India
  27. Chaitanya Godavari Grameena Bank
  28. Chattisgarh Gramin Bank
  29. Chikmagalur-Kodagu Gramin Bank
  30. City Union Bank
  31. Corporation Bank
  32. Deccan Gramin Bank
  33. Delhi Financial Corporation
  34. Dena Bank
  35. Dena Gujarat Gramin Bank
  36. Deutsche Bank
  37. Development Credit Bank
  38. Durg Rajnandgaon Gramin Bank
  39. Export Import Bank of India
  40. Guargaon Gramin Bank
  41. Hadoti Kshetriya Gramin Bank
  42. Haryana Gramin Bank
  43. HDFC Bank Limited
  44. Himachal Gramin Bank
  45. ICICI Bank Limited
  46. IDBI Bank Limited
  47. Indian Bank
  48. Indian Overseas Bank
  49. IndusInd Bank
  50. ING Vysya Bank
  51. Jaipur Thar Gramin Bank
  52. Jammu & Kashmir Development Finance Corporation
  53. Jammu & Kashmir Gramin Bank
  54. Jharkhand Gramin Bank
  55. Karnataka Bank
  56. Karnataka Vikas Grameena Bank
  57. Kashi Gomti Samyut Gramin Bank
  58. Kerala Financial Corporation
  59. Krishna Grameena Bank
  60. Lakshmi Vilas Bank
  61. Langpi Dehangi Rural Bank
  62. Madhya Bharat Gramin Bank
  63. Madhya Bihar Gramin Bank
  64. Maharashtra Gramin Bank
  65. Malwa Gramin Bank
  66. Meghalaya Rural Bank
  67. MGB Gramin Bank
  68. Mizoram Rural Bank
  69. Nainital-Almora Kshetriya Gramin Bank
  70. Narmada Malwa Gramin Bank
  71. National Small Industries Corporation Limited
  72. Neelachal Gramya Bank
  73. North Eastern Development Finance Corporation Limited
  74. North Malabar Gramin Bank
  75. Oriental Bank of Commerce
  76. Pallavan Gramin Bank
  77. Pandyan Grama Bank
  78. Parvatiya Gramin Bank
  79. Pragathi Gramin Bank
  80. Prathama Bank
  81. Puduvai Bharathiar Grama Bank
  82. Punjab & Sind Bank
  83. Punjab Gramin Bank
  84. Punjab National Bank
  85. Purvanchal Gramin Bank
  86. Rajasthan Gramin Bank
  87. Rewa Siddhi Gramin Bank
  88. Rushikulya Gramya Bank
  89. Samastipur Kshetriya Gramin Bank
  90. Saptagiri Grameena Bank
  91. Sarva UP Gramin Bank
  92. Satpura Narmada Kshetriya Gramin Bank
  93. Saurashtra Gramin Bank
  94. Sharda Gramin Bank
  95. Shreyas Gramin Bank
  96. Small Industries Development Bank of India [SIDBI]
  97. South Malabar Gramin Bank
  98. Standard Chartered Bank
  99. State Bank of Bikaner & Jaipur
  100. State Bank of Hyderabad
  101. State Bank of India
  102. State Bank of Mysore
  103. State Bank of Patiala
  104. State Bank of Travancore
  105. Surguja Kshetriya Gramin Bank
  106. Sutlej Gramin Bank
  107. Syndicate Bank
  108. Tamilnadu Mercantile Bank
  109. The Dhanalakshmi Bank
  110. The Federal Bank
  111. The Jammu & Kashmir Bank
  112. The Karur Vysya Bank
  113. The Nainital Bank
  114. The Ratnakar Bank
  115. The South Indian Bank
  116. The Tamil Nadu Industrial Investment Corporation [TIIC]
  117. Tripura Gramin Bank
  118. Triveni Kshetriya Gramin Bank
  119. UCO Bank
  120. Union Bank of India
  121. United Bank of India
  122. Uttar Bihar Gramin Bank
  123. Uttaranchal Gramin Bank
  124. Uttarbanga Kshetriya Gramin Bank
  125. Vananchal Gramin Bank
  126. Vidharbha Kshetriya Gramin Bank
  127. Vidisha Bhopal Kshetriya Gramin Bank
  128. Vijaya Bank
  129. Visveshvaraya Grameena Bank
  130. Wainganga Krishna Gramin Bank
  131. Yes Bank

How IndiaFilings can help you get loan under CGTMSE Scheme

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