Business funding through CGTMSE for SMEs

The Indian government introduced the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) for SME companies funding support up to 1Cr under CGTMSE scheme. This scheme for SMEs helps collateral-free credit through a trust fund managed by the Ministry of Micro, Small and Medium Enterprises and the Small Industries Development Bank of India (SIDBI). The financial institutions that offer this scheme are all scheduled commercial banks and specified NSIC, SIDBI, NEDFi and Regional Rural Banks, which have entered into an agreement with the Trust for the purpose.

Limit :- The eligible loan limit under the Scheme is Rs.100 lacs. A borrower, who has availed certain credit facilities secured by collaterals and/or third party guarantees and is sanctioned distinct/separate credit facility without collateral security/third party guarantee, can be covered under CGTMSE scheme.

Maximum Risk Cover:- Of the credit facilities extended by MLIs, Trust shall guarantee, in case of default by the borrower, up to 75 per cent (85% for select category of borrowers), of the defaulted principal amount in respect of term credit including interest on principal for one quarter and / or outstanding working capital advances (inclusive of interest), as on the date of account becoming NPA, or as on the date of filing the suit, whichever is lower. Other charges such as penal interest, commitment charge, service charge, or any other levies/ expenses shall not qualify for the guarantee cover.

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