How to Apply for CGTMSE Loan?

Published: 12 February 2024

Updated: 28 November 2025

Every business needs loans but some small businesses have trouble taking them. They need to meet some requirements and give something valuable as security to get loans from lenders. But some business owners cannot do that. So the government started a plan called CGTMSE. This plan helps lenders give money to small businesses. If the business cannot repay the loan then government will pay for it.

What is the CGTMSE Scheme?

CGTMSE loan scheme is also a loan scheme to assist small businesses, whose objective is to provide easy loans to new businessmen by providing credit guarantees to banks and NBFCs. This arrangement allows firms to obtain loans without placing any property. Govt of India and financial institution SIDBI launched the CGTMSE scheme in 2000. The starting cost for this plan was Rs 2500 crore but after a few years, it was raised to Rs 5000 crore.

Features of the CGTMSE Scheme

CGTMSE scheme offers the below-listed features and benefits to SMEs and Financial institutions:

Feature	Description
Loan types	Both term loans and working capital loans
Loan amount	Up to Rupees 500 lakh per MSE borrower
Eligibility	Both new and existing MSEs engaged in manufacturing or service activities including trading activities
Guarantee coverage	Different levels depend on the category of the borrower, the amount of the loan, and the location of the MSE. Maximum extent of 85% for certain categories
Guarantee fee and service fee	One-time guarantee fee and annual service fee based on the credit facility sanctioned and the extent of guarantee coverage. Minimum guarantee fee of 0.37% per annum and minimum service fee of 0.05% per annum
Collateral security and third-party guarantee	Not required, subject to the MLIs’ own credit appraisal and due diligence
Online platform	Quick and easy portal for the MLIs to register, apply, and claim guarantee cover using their CGTMSE login credentials
Incentives and benefits	Reduced guarantee fees, increased guarantee coverage, and recognition awards based on the performance of businesses and lending institutes.

Interest Rate of CGTMSE Scheme

Under this scheme interest rates are not decided by the CGTMSE authority because interest rate is decided by those banks and NBFCs which provide loans to businesses. All financial institutions determine the interest rate according to loan eligibility and rules. Generally, the interest rate on the loan amount given under this scheme is very low.

What is Credit Guarantee Scheme Eligibility?

Credit guarantee scheme eligibility criteria are below:

Borrower criteria	Description
MSE definition	Investment in plant and machinery or equipment should not exceed rupees 10 crore for manufacturing enterprises and rupees 5 crore for service enterprises, as per the MSME Development Act 2006
Business activity	Manufacturing or service activity including trading activity that is eligible under the scheme. The list of eligible activities can be found on the CGTMSE website
Other credit guarantee schemes	Not availing any other credit guarantee scheme from the Government of India or any other agency
Default status	Not a defaulter or a willful defaulter with any bank or financial institution
Business plan and credit history	Viable business plan and good credit history

Document Require for CGTSME Scheme

The documents required for the CGTSME scheme are as follows:

You need to submit your loan application to the websites of Banks and finance companies. Provide Aadhar card, Business proof, Income proof, bank statement, and Project report.
Financial institutions should check the borrower’s credit history and project details and approve the loan if they are happy. Lenders should also get the borrower’s permission to use the scheme’s guarantee in case the borrower can not pay back the loan.
Financial organizations should apply for the guarantee cover online through the CGTMSE portal within 30 days of sanctioning the loan and paying the guarantee fee.
CGTMSE department should issue the guarantee cover to financial institutions within 30 days of receiving the application subject to the availability of funds and compliance with the scheme norms.
Borrowers should fill out a loan form and give documents like ID, address, business, income, bank, project, etc to the bank or finance company.
Banks and finance companies should check the borrower and the project details and give the loan if they are happy. A lender should also get the borrower’s review for the scheme’s help.
Lenders should ask for the scheme’s help online on the CGTMSE website within 30 days of giving the loan and paying the fee.
CGTMSE should give help to the lender within 30 days of getting the request if they have money and the request is right.

How to Apply for the CGTSME Scheme?

You can follow the below steps to apply for the CGTSME scheme:

Borrowers should go to the CGTMSE scheme and check all the eligibility criteria.
After making the decision go to the nearest Bank and Finance company branch and fill out the application form for the scheme.
The financial company will approve the loan and apply for the guarantee cover electronically via the CGTMSE portal.
CGTMSE department will issue guarantee cover to the financing institution and notify the borrower.
The finance company gives a loan amount under the scheme to the borrower's account after carefully monitoring the applicant's credibility.

Conclusion

CGTMSE scheme is beneficial for those MSEs who want to take credit facilities without collateral security. This scheme provides a credit guarantee to the lending institution to distribute loans to MSEs. In this scheme, the risk factor of loan recovery is very low for financial organizations. This scheme also offers various features and incentives to businesses and finance institutions. If you want to take a loan under this scheme you can apply by visiting the official website of the CGTMSE department and you can also apply for this loan by visiting the physical address of the above scheme branch.

Also Read:
- Importance of MSME Loan for Small Business Owners
- How to Get MSME Loan for New Business Online?

Share:

Anjali Singh Assistant Manager

Hey there, I'm Anjali Singh. With over 6 years of experience in finance, I specialize in creating content on banking, loans, and financial planning. My goal is to simplify complex financial topics and help readers make informed decisions through my articles.