Key Features of CGTMSE Loans:

Here are the key features of CGTMSE loans:

1. Collateral-Free Loans

• Borrowers are not required to provide collateral or third-party guarantees for loans under the CGTMSE scheme.
• The Credit Guarantee Fund Trust acts as a guarantor for the lender.

2. Eligibility

• Available for micro and small enterprises (MSEs), including both new and existing businesses.
• Startups in the manufacturing, service, and trade sectors (excluding retail trade) are eligible.
• Educational institutions, training centers, and SHGs are generally not covered.

3. Loan Amount

• Loans up to ₹2 crore can be sanctioned under the scheme.

4. Guarantee Coverage

• The CGTMSE trust guarantees a percentage of the loan:
  • 85% coverage for micro-enterprises for loans up to ₹5 lakh.
  • 75% coverage for loans above ₹5 lakh.
  • 80% coverage for women entrepreneurs and businesses in the North-East region.

5. Lenders

• Loans are provided by institutions registered with CGTMSE, including:
  • Scheduled commercial banks.
  • Regional rural banks (RRBs).
  • Small finance banks.
  • NBFCs approved by CGTMSE.

6. Guarantee Fee

• An annual guarantee fee is charged:
  • Typically 1% to 1.5% of the loan amount.
  • This fee may be reduced for micro-enterprises or businesses in special sectors.

7. Interest Rates

• Determined by the lender, but must comply with Reserve Bank of India (RBI) guidelines.
• Rates are typically competitive to ensure affordability for small businesses.

8. Repayment Terms

• Loan repayment terms, including tenure and EMI, are set by the lender, usually ranging between 5 to 7 years.
• The maximum repayment period is typically 10 years, depending on the loan.

9. Purpose of Loan

• The loan can be used for business expansion, working capital, infrastructure development, or any other approved business-related purpose.

10. Focus on Women and Special Regions

• The scheme provides enhanced benefits to women entrepreneurs and businesses in the North-East region of India.

11. Support for First-Time Entrepreneurs

• Designed to encourage entrepreneurship by providing financial support to startups and first-time business owners who lack collateral.

12. Simplified Application Process

• Application and approval processes are designed to be simple and fast. Many lenders also offer online application facilities.

By providing collateral-free loans, the CGTMSE scheme enables small businesses to access financial support, helping them grow and sustain their operations.

o apply for a CGTMSE loan, you need to provide certain documents to the lender. The exact requirements may vary slightly depending on the financial institution, but here’s a general list of documents commonly required:

1. Personal Identification Documents

• PAN card (of the borrower, business owner, and co-applicant, if any).
• Aadhaar card (or other government-issued ID such as passport, voter ID, or driving license).

2. Address Proof

• Business address proof (electricity bill, rental agreement, property tax receipt, etc.).
• Personal address proof of the applicant (Aadhaar card, utility bill, or bank statement).

3. Business Registration Documents

• Proof of business registration (MSME/Udyam Registration Certificate).
• Partnership deed (if applicable) or Memorandum of Association (MoA) and Articles of Association (AoA) for companies.
• GST registration certificate.

4. Financial Documents

• Bank statements for the last 12 months.
• Audited financial statements for the last 2–3 years (for existing businesses):
  • Balance sheet.
  • Profit and loss account.
• Income tax returns (ITRs) of the business and/or owner for the last 2–3 years.

5. Business Plan or Project Report

• A detailed business/project report, which should include:
  • Nature of the business.
  • Revenue model and projections.
  • Purpose of the loan (working capital, business expansion, machinery purchase, etc.).
  • Details of the market, competitors, and future strategy.
• Cost estimates for the project.

6. Loan Application Form

• A duly filled loan application form provided by the financial institution.

7. Proof of Business Activity

• Purchase orders, invoices, or contracts to validate business operations.

8. Ownership or Rental Proof for Assets

• Proof of ownership (if applicable) or rental agreement for business premises.
• Proof of machinery or equipment purchase (if the loan is for machinery).

9. Other Supporting Documents

• Partnership agreements or board resolution (if applicable).
• Declaration or affidavit stating the loan will be used for business purposes.

10. Documents for Special Categories (if applicable)

• If applying as a women entrepreneur or under any special category (e.g., SC/ST, North-East), additional identity or eligibility certificates may be required.

Important Notes:

• The financial institution may request additional documents based on its internal policies.
• If the borrower is a startup or new business, the focus will be on the business plan, project report, and market viability instead of historical financial statements.

It’s always a good idea to consult the bank/NBFC you are applying to for a precise document checklist before submission.