CGTMSE Scheme 2026: Collateral-Free Bank Guarantee up to ₹10 Crore
How the CGTMSE credit guarantee trust enables micro and small enterprises to secure bank loans up to ₹10 Crore without providing third-party collateral or mortgage.
- •Maximum guarantee cover ceiling increased to ₹10 Crore for guarantees approved or renewed on or after 1 April 2025 (CGTMSE Circular 250/2024-25).
- •Guarantee coverage ratio ranges from 75% to 85% of the credit facility.
- •Higher 85% coverage available for Women Entrepreneurs, SC/ST, Micro Enterprises up to ₹5 Lakh, and ZED-certified units.
- •Borrowers deal directly with Member Lending Institutions (MLIs) — commercial banks & NBFCs — not with CGTMSE directly.
- •Enables high-growth MSMEs to secure multi-crore working capital and machinery term loans without pledging real estate collateral.
1. What is CGTMSE?
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was jointly set up by the Ministry of MSME, Government of India, and the Small Industries Development Bank of India (SIDBI) to make collateral-free credit flow seamlessly to the MSE sector.
Under CGTMSE, if a registered micro or small enterprise defaults on its bank loan due to genuine business failure, the Trust reimburses **75% to 85% of the defaulted amount** directly to the lending institution.
2. Historic Guarantee Limit Hike to ₹10 Crore
Through **CGTMSE Circular No. 250/2024-25 dated 18 March 2025**, the Trust officially enhanced the maximum guarantee coverage ceiling from ₹5 Crore to **₹10 Crore** for all credit facilities approved or renewed on or after **1 April 2025**.
This enhancement allows capital-intensive manufacturing units, exporters, and technology-driven MSMEs to access substantial debt capital for factory construction and high-end machinery procurement without mortgaging physical properties.
3. Guarantee Coverage Structure
| Borrower Category | Loan Amount | Extent of Guarantee Cover |
|---|---|---|
| : |
| : |
|---|
| : |
|---|
| Micro Enterprises | Up to ₹5 Lakh | 85% of sanctioned amount |
| Women / SC / ST / ZED Certified | Up to ₹10 Crore | 85% of sanctioned amount |
| Units in NER / UT of J&K / Ladakh | Up to ₹10 Crore | 85% of sanctioned amount |
| General Category MSEs | Up to ₹10 Crore | 75% of sanctioned amount |
4. Annual Guarantee Fee (AGF) Structure
To keep credit affordable, CGTMSE charges an Annual Guarantee Fee (AGF) based on the sanctioned loan amount and the risk rating of the lending institution:
- **Loans up to ₹10 Lakh:** ~0.37% to 0.50% p.a.
- **Loans between ₹10 Lakh and ₹1 Crore:** ~0.55% to 0.75% p.a.
- **Loans between ₹1 Crore and ₹5 Crore:** ~0.60% to 1.20% p.a.
- **Loans between ₹5 Crore and ₹10 Crore:** ~1.20% to 1.35% p.a.
- *Concessions of 10% in AGF are provided to Women-owned enterprises, SC/ST promoters, and units with ZED Gold/Silver certification.*
5. How to Obtain a CGTMSE Loan
- **Prepare Bankable DPR:** Prepare a detailed project report including past 3 years audited financials (for existing units), projected cash flows, CMA data, and machinery quotations.
- **Apply at MLI Bank:** Approach any CGTMSE Member Lending Institution (All Public Sector Banks, leading Private Banks like HDFC/ICICI/Axis, and SIDBI).
- **Request CGTMSE Coverage:** While submitting the loan application, explicitly request the bank to process the facility under the **CGTMSE Guarantee Scheme**.
- **Appraisal & Guarantee Sanction:** The bank assesses the project's debt-service coverage ratio (DSCR). Once satisfied with operational viability, the bank logs into the CGTMSE digital portal and secures the guarantee cover directly from the Trust.
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