Credit Guarantee Funds Trust for Micro and Small Enterprises is one of the major schemes inaugurated by the Indian government to elevate the entrepreneurial ecosystem in India.
It was started in August 2000 by the Ministry of Medium, Small, and Micro Enterprises (MSME) in cooperation with the Small Industries Development Bank of India (SIDBI).
Through this program, the ministry offers collateral-free credit to the micro and small enterprise sectors. For the implementation of the program, the Ministry of Micro, Small, and Medium Enterprises, GOI, and SIDBI established a Trust called CGTMSE for Micro and Small Enterprises.
CGTMSE provides a guarantee to the financial institutions up to a certain limit for all dealings done by them in the medium, small, and micro sectors.
This initiative enables banks and other lending institutions to grant funds to raising entrepreneurs without demanding security or third-party guarantees.
CGTMSE is one of the effective provisions that support small Indian businesses to flourish in a competing environment.
As the uncertainty of granting a bank loan without any collateral is a fundamental factor for all banks; the purpose of CGTMSE is to encourage these institutions to achieve their lending goals to the MSME market without any upsets.
The scope ofCGTMSE is up to 80% for –
1. All Micro and small enterprise which is administered and regulated by female entrepreneurs.
2. All credits are provided to the Northeastern states of India including Sikkim.
Existing and new enterprises both are eligible to be covered under the schemes that are involved in the process of:
• Manufacturing activity
• Service activity
• It is now available for selected NBFC'salso
The central aim of the scheme is to transform the dreams of entrepreneurs for setting up their businesses into actuality. It directs on establishing a solid credit relief system that will encourage a better credit flow to the MSME sector.
The entire procedure to opt loan for this scheme is presented below:
First of all, create a Business Plan including the complete details of your business. Your blueprint should be such that it defines the viability of the project.
Now, decide which lender bank to approach for the loan and submit the application and your business model there.
The bank will go through your application and business model and validate all details.
After affirmation, the bank will forward the application to the CGFTMSE Fund where the application will be viewed again. If it is accepted the CGFTMSE will command the bank to release funds for the business.