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CGTMSE collateral-free guarantee cover for MSE loans

  • CGTMSE is a government trust that guarantees your bank against default, so the bank can lend to a micro or small business without collateral up to ₹10 crore.
  • Deadline: Ask for CGTMSE cover at the loan application stage, before sanction and before any collateral is offered
  • Done in 7 working days to prepare the loan file; guarantee is taken by the bank after sanction
  • Prepared by your Savvy, checked by a CA
  1. Udyam Registration Certificate
  2. Is the unit micro or small under the 2025 limits
  3. Check MSE status
  4. Sanction letter marked CGTMSE covered
The law and the stepsPay and start · ₹4,999One time, with annual fee renewal by the lender, + 18% GST

Answer in brief

CGTMSE is a government trust that guarantees your bank against default, so the bank can lend to a micro or small business without collateral up to ₹10 crore. We prepare the loan file, ask the bank to sanction under CGTMSE, and check that the guarantee fee and terms in the sanction letter are right.

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From the official sources

What the law says, and what trips people up

From the official portal's manuals and FAQs, with the source for each point.

The law

  • CGTMSE scheme, guarantee ceiling raised to ₹10 crore from 1 April 2025 (Ministry of MSME reply, July 2026)

    Credit facilities to MSEs without collateral or third-party guarantee are covered up to ₹10 crore; credit deficient districts get extra 5% cover and 10% off the feeSource

  • CGTMSE scheme, how cover is obtained

    Borrower applies to a member lending institution; the MLI files the guarantee application for each borrower using its Member ID; lump-sum cover is not permittedSource

  • CGTMSE Circular No. 251/2024-25 dated 18 March 2025

    For facilities sanctioned or renewed from 1 April 2025, the annual guarantee fee is on the guaranteed amount in year one and on the outstanding amount after thatSource

  • CGTMSE scheme, Hybrid Security

    Bank may take collateral for part of the facility and CGTMSE covers the unsecured part up to ₹10 croreSource

  • CGTMSE scheme, tenure and ICDD

    Term loan cover runs for the agreed loan tenure; working capital cover for 5 years; MSEs in RBI-identified credit deficient districts get 5% more cover (for example 75% to 80%)Source

  • CGTMSE scheme, claims

    Lock-in of 18 months (9 months for guarantees up to ₹10 lakh with tenure up to 36 months); 75% of guaranteed share paid first after legal action, balance later; fraud and wilful defaulter accounts not eligibleSource

  • RBI Master Direction, Lending to MSME Sector, para 4.1(1), effective 1 April 2026

    No collateral for MSE loans up to ₹20 lakh (banks may go to ₹25 lakh); banks may use credit guarantee cover where applicableSource

  • Government fee

    Annual Guarantee Fee from 1 April 2025, excluding GST, by loan slab: up to ₹10 lakh 0.37%; above ₹10 lakh to ₹50 lakh 0.55%; above ₹50 lakh to ₹1 crore 0.60%; above ₹1 crore to ₹2 crore 0.85%; above ₹2 crore to ₹5 crore 1.00%; above ₹5 crore to ₹8 crore 1.10%; above ₹8 crore to ₹10 crore 1.20%. Payable upfront for year one, then yearly. Concessions for select categories, designated places and ZED certified units. Source: https://sbi.bank.in/web/business/sme/sme-government-schemes/cgtmse . SBI recovers the guarantee fee from the borrower's loan account on Stand-Up India loans; recovery practice varies by bank.

  • Late fee or penalty

    No penalty on the borrower, but cover lapses if the annual fee is not paid by the due date (fee due by 31 March, within 60 days of CGTMSE demand). Source: https://cgtmse.in/Home/VS/99

On the portal

  1. Borrower: register on udyamregistration.gov.in if not done
  2. Borrower: apply to a member lending institution at the branch or on JanSamarth
  3. Lender: log in to the CGTMSE portal with its Member ID and file the guarantee application for the borrower
  4. Lender: pay the guarantee fee; cover starts when the fee is credited to the Trust
  5. Lender: pay the annual fee each year to keep cover alive

What trips people up

  • Bank takes collateral or a third-party guarantee and still charges the CGTMSE fee

    Cover lapses if collateral is taken outside Hybrid Security; ask the bank to choose one or limit cover to the unsecured partSource

  • Bank asks collateral on a small MSE loan

    From 1 April 2026 banks cannot take collateral up to ₹20 lakh; cite RBI DirectionsSource

  • Borrower tries to apply to CGTMSE directly

    Only the member lender can file the cover; go through the bankSource

  • Cover denied because a past CGTMSE guarantee was invoked

    Settle the earlier invoked guarantee first; check before applyingSource

  • Change in management or constitution after sanction

    Cover continues only if new management meets eligibility; inform the bankSource

  • Weak project report leads to rejection even with CGTMSE

    Banks still appraise viability; prepare DSCR, cash flow and realistic projectionsSource

People ask

What is the maximum loan covered?

₹10 crore per borrower from 1 April 2025, up from ₹5 crore.Source

Who pays the guarantee fee?

The lender pays the Trust. Banks often recover it from the borrower; SBI recovers it from the loan account on Stand-Up India loans.Source

Are retail and wholesale traders covered?

Yes. Trading activity, including wholesale trade, is eligible.Source

Can part of my loan be against property and part under CGTMSE?

Yes, under Hybrid Security the unsecured part can be covered up to ₹10 crore.Source

If I default, is my debt waived?

No. The Trust pays the bank, but the bank must still recover from you and pass recoveries back to CGTMSE.Source

How long does the cover last for a cash credit limit?

Five years for working capital only, renewable on payment of fee.Source

IDFD

How we solve it: 4 steps

Every line tracked live.

Step 1 of 4 · What we need from you

Tap each one you already have

Ready0 / 8
  • Udyam Registration Certificate
  • KYC of unit and promoters
  • Project report with projections
  • Last 2 to 3 years ITR and financialsOptional
  • Business premises rent or ownership proof
  • Existing loans and guarantees list
  • ZED certificate, if anyOptional
  • Women, SC/ST or district status proofOptional

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₹4,999 + ₹899.82 GST = ₹5,898.82

One time, with annual fee renewal by the lender. Delivered in 7 working days to prepare the loan file; guarantee is taken by the bank after sanction. Due: Ask for CGTMSE cover at the loan application stage, before sanction and before any collateral is offered

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