{"id":1501,"date":"2019-12-23T08:17:57","date_gmt":"2019-12-23T08:17:57","guid":{"rendered":"\/blog\/?p=1501"},"modified":"2025-01-16T11:59:11","modified_gmt":"2025-01-16T06:29:11","slug":"credit-guarantee-fund-scheme-for-micro-and-small-enterprises","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/loan-for-business\/credit-guarantee-fund-scheme-for-micro-and-small-enterprises\/","title":{"rendered":"All You Need to Know About Credit Guarantee Fund Scheme for Micro and Small Enterprises"},"content":{"rendered":"\n<p>Micro and Small\nEnterprises (MSME) are often termed as the \u201cengine of growth\u201d for an economy in\nterms of creating employment, giving a boost to industries, leading to\ninclusivity in growth, among others. Of all the hurdles faced by MSME in\nrunning their businesses successfully, the non-availability of credit at\nreasonable interest rates is the most important. Be it working capital, new\nequipment, marketing expenditure or labour cost, MSMEs require funds for a\nvariety of needs that cannot be funded by savings alone.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background has-vivid-cyan-blue-background-color\" href=\"https:\/\/tata-blog.osian.dev\/business-loan.html\">Know More<\/a><\/div>\n\n\n\n<p>One of the major factors responsible for credit shortage is the higher perceived risk amongst banks in lending to this sector. The problem gets even worse when the loan amount is small or the businesses are newly started by first-generation entrepreneurs.&nbsp;Business loans&nbsp;are an option, but they are especially difficult when the business is at a nascent stage. To assist these businesses, the government of India launched a Credit Guarantee Scheme on 30th August 2000 intending to help these businesses in tackling financial hurdles.<\/p>\n\n\n\n<p><strong>What is the Credit\nGuarantee Scheme?<\/strong><\/p>\n\n\n\n<p>Credit guarantee\noffers unsecured term loans or working capital loans to MSMEs. The salient\nfeatures of the scheme include:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The loans are collateral-free with no requirement for security or third-party guarantee<\/li><li>In case the borrower falls sick during the loan period, the lender offers rehabilitation facilities to the party. This falls under the guarantee scheme<\/li><li>Individual loans up to Rs. 100 lakhs are lent&nbsp;<\/li><li>Covers both existing and new enterprises excluding educational institutions, agricultural loans, self-help groups, training institutions, etc.&nbsp;<\/li><li>Maximum guarantee cover is 85% of the sanctioned loan amount<\/li><li>The corpus for the scheme was planned to be around Rs. 2500 crores by the 11th Plan<\/li><\/ul>\n\n\n\n<p><strong>Who Runs the Scheme?<\/strong><\/p>\n\n\n\n<p>The Ministry of\nMicro, Small and Medium Enterprises, along with the Government of India (GoI)\nand the Small Industries Development Bank of India (SIDBI) jointly run the\nCredit Guarantee Scheme. They established a Credit Guarantee Fund Trust for\nMicro and Small Enterprises (CGTMSE) for the implementation of the scheme. The\ngovernment and SIDBI plan to contribute in the ratio of 4:1 for the corpus of\nthe fund.&nbsp;<\/p>\n\n\n\n<p><strong>Eligibility of the\nScheme?<\/strong><\/p>\n\n\n\n<p>Both new and existing\nMSMEs can avail credit under this scheme with a guarantee cover up to 75% of\nthe sanctioned amount up to Rs. 50 lakhs (85% for loans up to Rs. 5 lakhs and\n80% for loans to women entrepreneurs and Sikkim residents).<\/p>\n\n\n\n<p>In terms of lenders,\n133 banks\/financial institutions are eligible lending institutions registered\nwith CGTMSE including scheduled commercial banks (Public, Private and Foreign\nbanks) and select rural banks (\u2018Sustainable Viable\u2019 under NABAD).<\/p>\n\n\n\n<p><strong>Conclusion<\/strong><\/p>\n\n\n\n<p>The government has taken numerous efforts to increase awareness about this initiative through print, press, seminars, workshops, etc. With increased awareness, MSMEs looking for credit for their businesses will approach eligible lenders to avail loans under the Credit Guarantee Scheme and tackle any financial shortcomings that may come in the way of their business.&nbsp; Looking for a convenient alternative option of&nbsp;loan for your business?&nbsp;Tata Capital offers&nbsp;business loans&nbsp;with flexible&nbsp;business loan eligibility, easy EMI options, attractive interest rates, and other benefits.<\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background has-vivid-cyan-blue-background-color\" href=\"https:\/\/tata-blog.osian.dev\/online\/loans\/business-loans\/home\">Apply Now<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Micro and Small Enterprises (MSME) are often termed as the \u201cengine of growth\u201d for an economy in terms of creating employment.<\/p>\n<p><a href=\"https:\/\/tata-blog.osian.dev\/blog\/business-loan\/credit-guarantee-fund-scheme-for-micro-and-small-enterprises\/\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":1502,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[26],"tags":[],"class_list":["post-1501","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-for-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.13 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>All You Need to Know About Credit Guarantee Fund Scheme for Micro and Small Enterprises - TATA Capital Blog<\/title>\n<meta name=\"description\" content=\"Explore the Credit Guarantee Fund Scheme (CGS) for micro and small enterprises in India. Learn how this scheme helps in obtain collateral-free loans &amp; boost your business growth.\" \/>\n<meta name=\"robots\" content=\"noindex, nofollow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"All You Need to Know About Credit Guarantee Fund Scheme for Micro and Small Enterprises - TATA Capital Blog\" \/>\n<meta property=\"og:description\" content=\"Explore the Credit Guarantee Fund Scheme (CGS) for micro and small enterprises in India. Learn how this scheme helps in obtain collateral-free loans &amp; boost your business growth.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.tatacapital.com\/blog\/loan-for-business\/credit-guarantee-fund-scheme-for-micro-and-small-enterprises\/\" \/>\n<meta property=\"og:site_name\" content=\"TATA Capital Blog\" \/>\n<meta property=\"article:published_time\" content=\"2019-12-23T08:17:57+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-01-16T06:29:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.tatacapital.com\/blog\/wp-content\/uploads\/2019\/12\/small-enterprises.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"770\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Tata Capital\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tata Capital\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.tatacapital.com\/blog\/loan-for-business\/credit-guarantee-fund-scheme-for-micro-and-small-enterprises\/\",\"url\":\"https:\/\/www.tatacapital.com\/blog\/loan-for-business\/credit-guarantee-fund-scheme-for-micro-and-small-enterprises\/\",\"name\":\"All You Need to Know About Credit Guarantee Fund Scheme for Micro and Small Enterprises - TATA Capital Blog\",\"isPartOf\":{\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#website\"},\"datePublished\":\"2019-12-23T08:17:57+00:00\",\"dateModified\":\"2025-01-16T06:29:11+00:00\",\"author\":{\"@id\":\"https:\/\/www.tatacapital.com\/blog\/#\/schema\/person\/5ccf99347b9365e2fa68bd32006d0b4a\"},\"description\":\"Explore the Credit Guarantee Fund Scheme (CGS) for micro and small enterprises in India. 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