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How to get a Business Loan under CGTMSE Scheme

Last updated : March 13th, 2023 08:38 pm

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:

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