The scheme, jointly established by the Ministry of MSME and SIDBI, is designed to strengthen credit delivery to the MSE sector.

• •Guaranteed Cover: Provides guarantee coverage to the lender, securing up to 85% of the credit facility.
• •Loan Limit: Loans up to ₹5 Crore are eligible for guarantee coverage (For individual borrower).
• •Eligible Credit Facilities: Both Term Loans and Working Capital facilities (Fund-based and Non-Fund based) are covered.
• •Entry Barrier Reduction: Eliminates the need for traditional collateral, making it easier for new entrepreneurs to access finance.

The extent of the guarantee cover varies based on the loan amount, category of borrower, and location.

• •85% Guarantee: For loans up to ₹5 Lakh (Micro Enterprises).
• •80% Guarantee: For loans up to ₹50 Lakh for MSEs owned and/or operated by Women, SC/ST, and for all loans in NER/Sikkim/J&K/Ladakh.
• •75% Guarantee: For loans above ₹50 Lakh up to ₹5 Crore, and for other specified categories.
• •Minimum Guarantee: The minimum guarantee cover is 50% for all loans above ₹1 Crore, up to ₹5 Crore.

• •Nature of Unit: New or existing Micro and Small Enterprises (MSEs) involved in manufacturing or service activities.
• •Exclusions: Units engaged in retail trade, educational institutions, self-help groups (SHGs), or agricultural activities are generally excluded (unless covered under specific MUDRA/Stand-Up schemes).
• •Credit Limit: Credit facility must be sanctioned without any collateral security or third-party guarantee.
• •Legal Forms: Proprietorships, Partnership Firms, Private Limited Companies, Public Limited Companies, etc., are eligible.

The entrepreneur applies for the loan, and the lending institution secures the guarantee from CGTMSE.

1. Loan Application: The entrepreneur applies for a term loan or working capital to any Member Lending Institution (MLI) listed with CGTMSE (e.g., Commercial Banks, RRBs, SFBs, NBFCs).

2. MLI Appraisal: The MLI appraises the business proposal for its viability and feasibility, and sanctions the credit facility on a collateral-free basis.

3. Guarantee Application: The MLI applies to CGTMSE for the guarantee cover within 90 days of the loan sanction.

4. Fees Payment: The MLI pays a one-time Guarantee Fee and an Annual Service Fee to CGTMSE, which is usually passed on to the borrower.

• •Udyam Registration Certificate (Mandatory for MSEs).
• •Detailed Project Report (DPR) or Business Plan.
• •KYC documents for the promoters/directors.
• •Last 2-3 years' financial statements (if an existing unit).
• •Loan application form with a clear mention of the intent to avail CGTMSE cover.