CGTMSE Credit Guarantee: Eligibility & Application 2026
CGTMSE enables micro and small enterprises to get collateral-free bank loans by providing a government-backed credit guarantee cover of up to 85% of the loan amount.
Key Benefits
₹2 Crore
Maximum amount
Guarantee cover: 85% for micro enterprises (loans up to ₹5L), 75% for others. Guarantee fee: 1.5% p.a. on outstanding loan (paid by borrower/bank). No collateral required by bank.
Eligibility Criteria
- Udyam-registered micro or small enterprise (manufacturing or service sector)
- New or existing enterprise — both are eligible, unlike PMEGP which is new-business-only
- Loan purpose: term loan, working capital, or composite credit facility from a scheduled bank or NBFC
- No default on existing loans — good credit history is essential for bank approval
- Not eligible: agricultural activities, self-help groups, retail trade (some banks exclude), educational institutions
- Annual guarantee fee of approximately 1–1.5% of the outstanding loan is charged (passed on to borrower in most cases)
Frequently Asked Questions
Does CGTMSE guarantee replace collateral?
Yes — that is CGTMSE's primary purpose. Member lending institutions (MLIs) cannot ask for collateral or third-party guarantee for CGTMSE-covered loans. The guarantee itself serves as the security. However, the enterprise's primary assets (stock, receivables) may still be hypothecated.
Who can apply for CGTMSE — borrower or bank?
The Member Lending Institution (bank or NBFC) applies for CGTMSE guarantee on your behalf. As a borrower, you apply for the loan from a participating bank and request CGTMSE coverage. The bank handles the guarantee registration with CGTMSE.
What types of loans are covered under CGTMSE?
CGTMSE covers: term loans, working capital facilities, composite credit, and non-fund-based facilities (bank guarantees, LCs). It covers both funded and non-funded credit up to ₹2 crore per borrower per lender.
Is there an income or turnover limit for CGTMSE?
There is no specific turnover ceiling for CGTMSE beyond the Udyam micro/small enterprise definition: micro = investment ≤ ₹1 crore + turnover ≤ ₹5 crore; small = investment ≤ ₹10 crore + turnover ≤ ₹50 crore.
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