CGTMSE: Full Form, Loan Limit, Fee Structure, and How It Works in 2025
CGTMSE, Credit Guarantee Fund Trust for Micro and Small Enterprises, is a government-backed credit guarantee scheme that enables banks and NBFCs to provide collateral-free loans to micro and small enterprises, with the trust covering up to 85% of the loan in case of default. Established in 2000 by the Ministry of MSME and SIDBI, CGTMSE allows eligible borrowers to access loans up to ₹5 crore without pledging assets or property. This page explains the full form, fee structure, guarantee coverage, eligible lenders, and what CGTMSE means for your business loan application.
What is CGTMSE?
CGTMSE stands for Credit Guarantee Fund Trust for Micro and Small Enterprises. It is a trust set up jointly by the Government of India (Ministry of MSME) and the Small Industries Development Bank of India (SIDBI) in August 2000. CGTMSE does not lend money directly to borrowers, instead, it provides a credit guarantee cover to Member Lending Institutions (MLIs, banks, NBFCs, and financial institutions) that lend to micro and small enterprises without collateral.
When a borrower defaults, CGTMSE reimburses the MLI for the guaranteed portion of the outstanding loan, typically 75% to 85% depending on the borrower category. This guarantee removes the lender's risk of collateral-free lending, incentivising banks to lend to MSMEs that lack assets to pledge. The scheme was significantly revised in 2023 to increase the guarantee limit from ₹2 crore to ₹5 crore and to introduce a hybrid security model allowing partial collateral for larger loans. CGTMSE is one of the largest credit guarantee schemes in the world by volume of guarantees outstanding.
CGTMSE, Key Facts
| Parameter | Detail |
|---|---|
| Full form | Credit Guarantee Fund Trust for Micro and Small Enterprises |
| Established | August 2000 |
| Set up by | Ministry of MSME + SIDBI (joint trustees) |
| Guarantee limit | Up to ₹5 crore per borrower |
| Maximum guarantee coverage | 85% of outstanding loan (for select categories) |
| Standard guarantee coverage | 75% of outstanding loan |
| Who benefits directly | Banks / NBFCs / MLIs (not borrowers directly) |
| Who benefits indirectly | Micro and small enterprise borrowers, collateral-free access |
| Annual Guarantee Fee (AGF) | Charged to the MLI; typically passed to borrower, varies by loan size and category |
| Portal | cgtmse.in |
Key Benefits of CGTMSE for MSME Borrowers
| Benefit Type | Amount / Description | Applicable Category |
|---|---|---|
| Collateral-free loans | Loans up to ₹5 crore without property or asset pledge | Micro and small enterprises |
| Guarantee coverage | 75%–85% of outstanding loan covered by CGTMSE in case of default | Borrowers through MLIs |
| Enhanced coverage for women / NER / SC/ST | 85% guarantee coverage | Women entrepreneurs, North East Region, SC/ST, ZED-certified MSMEs |
| Hybrid security (above ₹2 crore) | Partial collateral allowed alongside CGTMSE guarantee for loans ₹2–5 crore | Larger MSMEs |
| No third-party guarantee | CGTMSE replaces the need for personal guarantors | All eligible borrowers |
| Cheaper credit access | Banks take lower risk → willing to lend at lower rates vs unsecured personal loans | All CGTMSE-covered borrowers |
CGTMSE Fee Structure, Annual Guarantee Fee (AGF)
The Annual Guarantee Fee is paid by the lending institution and is typically passed on to the borrower as part of the loan cost. The fee is charged on the guaranteed amount (not the full loan amount).
| Loan Category | AGF Rate (% p.a. on guaranteed amount) |
|---|---|
| Loans up to ₹5 lakh, micro enterprises | 0.37% p.a. |
| Loans above ₹5 lakh to ₹50 lakh, micro enterprises | 0.55% p.a. |
| Loans above ₹50 lakh to ₹2 crore | 1.35% p.a. |
| Loans above ₹2 crore to ₹5 crore | 1.80% p.a. |
| Women / NER / SC/ST / ZED-certified MSMEs (any limit) | 0.37%–0.55% p.a. (concessional rate) |
| Loans under PM Vishwakarma | 0% AGF (fully waived by government) |
| Loans under PM Mudra Shishu | 0% AGF (fully waived) |
Fee structure is subject to revision by CGTMSE. Verify the current fee schedule at cgtmse.in before finalising your loan.
How CGTMSE Works, Step by Step
CGTMSE is not applied for by the borrower directly, the lending bank applies on the borrower's behalf.
- Borrower applies for a business loan at an MLI (bank, NBFC, or SFB) without collateral
- MLI assesses the loan based on business viability, credit history, and repayment capacity
- MLI sanctions the loan and simultaneously applies for CGTMSE guarantee cover on the portal (cgtmse.in)
- CGTMSE approves the guarantee and issues a guarantee certificate, the MLI is now protected against default up to the guaranteed amount
- Loan is disbursed to the borrower, the borrower repays as per the agreed EMI schedule
- Annual Guarantee Fee (AGF) is paid by the MLI each year (typically built into loan pricing)
- If borrower defaults: MLI files a claim with CGTMSE after following due recovery process; CGTMSE reimburses the guaranteed portion
Eligibility, Who Can Access CGTMSE-Covered Loans
| Criterion | Requirement |
|---|---|
| Enterprise type | Micro and Small Enterprises as defined under the MSME Development Act 2006 and revised MSME definition 2020 |
| Activity | Manufacturing or service sector; trading activity is excluded from CGTMSE guarantee |
| New or existing | Both new and existing enterprises are eligible |
| Loan purpose | Term loan and / or working capital for business purposes |
| Maximum loan | ₹5 crore (guarantee available up to this limit) |
| Collateral | None required up to the CGTMSE guarantee limit |
| Udyam Registration | Recommended but not mandatory for all MLIs, verify with your bank |
| Trading enterprises | Generally excluded; manufacturing and services eligible |
Eligibility is subject to revision. Verify at cgtmse.in or with your lending institution.
Eligible Lending Institutions (MLIs)
CGTMSE guarantee is available through Member Lending Institutions, any of these can provide CGTMSE-covered loans:
| Category | Examples |
|---|---|
| Public sector banks | SBI, PNB, Bank of Baroda, Canara Bank, Union Bank, Bank of India, and all other PSBs |
| Private sector banks | HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Yes Bank |
| Small Finance Banks | AU SFB, Ujjivan SFB, Jana SFB, Equitas SFB |
| Regional Rural Banks | All RRBs across states |
| NBFCs | Selected NBFCs empanelled with CGTMSE |
| MFIs | Select Microfinance Institutions for micro-enterprise loans |
Full current list of MLIs at cgtmse.in → Member Lending Institutions.
Documents Required (from Borrower to the Bank)
| Document | Purpose |
|---|---|
| Udyam Registration Certificate | MSME identity; recommended for CGTMSE loans |
| Aadhaar card | KYC for proprietor / partners / directors |
| PAN card | Business and personal tax identity |
| Business registration proof | GST registration, trade licence, partnership deed, or company incorporation |
| 2 years IT returns or audited financials | Business income verification |
| Bank statements, 12 months | Cash flow and repayment capacity assessment |
| Business plan / project report | For new or expanding enterprises |
| Address proof, business and residence | KYC |
How to Apply for a CGTMSE-Covered Business Loan
- Check your MSME classification, ensure your enterprise qualifies as micro or small under the 2020 revised definition (manufacturing: investment up to ₹10 crore, turnover up to ₹50 crore; services: investment up to ₹10 crore, turnover up to ₹50 crore)
- Approach an MLI, visit any bank, SFB, or NBFC listed as a CGTMSE MLI
- Apply for a collateral-free business loan, request CGTMSE guarantee coverage explicitly
- Submit documents as listed above, the bank assesses viability
- Bank applies for CGTMSE guarantee on your behalf at cgtmse.in, you do not apply to CGTMSE directly
- Loan is sanctioned and disbursed after CGTMSE guarantee approval
- AGF is built into your loan cost, check how your bank has priced it
PaisaOne does not process CGTMSE or business loan applications. Apply directly at any MLI branch.
How to Check CGTMSE Status
- Borrowers do not have direct access to CGTMSE's guarantee records, this is between the bank and CGTMSE
- To confirm CGTMSE guarantee on your loan, ask your bank's relationship manager for the guarantee reference number
- CGTMSE Portal: cgtmse.in (for MLIs and scheme information)
- CGTMSE Helpline: 022-67541313
- Email: ho@cgtmsi.com
CGTMSE removes the collateral barrier, but interest rates on business loans still vary significantly across banks. Compare business loan rates from 30+ banks and NBFCs on PaisaOne before approaching an MLI. A lower rate on a ₹50 lakh loan saves you lakhs over a 5-year term.
CGTMSE Fee Calculation, Worked Example
Scenario: Small enterprise, ₹25 lakh term loan, standard category
| Parameter | Value |
|---|---|
| Loan amount | ₹25,00,000 |
| Guarantee coverage | 75% of outstanding |
| Guaranteed amount | ₹18,75,000 |
| AGF rate (₹5–50 lakh category) | 0.55% p.a. on guaranteed amount |
| AGF in Year 1 | ₹18,75,000 × 0.55% = ₹10,313 |
| AGF reduces annually | As outstanding loan reduces, guaranteed amount and AGF reduce proportionally |
This AGF is paid by the bank and typically incorporated into the loan's effective interest rate or charged as a fee component. Ask your bank to disclose the AGF loading on your loan.
State-Wise CGTMSE Coverage
CGTMSE is a national scheme available through all MLIs across India, there are no state-specific variations in guarantee terms. However, some states add complementary state-level guarantee schemes:
| State | State-Level Credit Guarantee / Complementary Scheme |
|---|---|
| Tamil Nadu | TANSIDCO credit guarantee for small industries |
| Maharashtra | MSMEDIA, Maharashtra MSME credit support |
| Karnataka | Karnataka State Financial Corporation (KSFC) credit guarantee for MSMEs |
| Rajasthan | RSMSSB-linked guarantee for Rajasthan MSME loans |
| Andhra Pradesh | AP MSME policy interest subvention alongside CGTMSE |
| Gujarat | GESIA / GIDC cluster support + CGTMSE convergence |
| Uttar Pradesh | UP MSME interest subvention scheme alongside CGTMSE |
| West Bengal | WBIDC MSME support for guarantee-backed loans |
What is CGTMSE and who is it for? CGTMSE stands for Credit Guarantee Fund Trust for Micro and Small Enterprises. It is a trust established in August 2000 by the Ministry of MSME and SIDBI to provide credit guarantees to banks and NBFCs lending to micro and small enterprises without collateral. CGTMSE covers up to 85% of the outstanding loan in case of default, incentivising lenders to extend collateral-free loans up to ₹5 crore to MSMEs that lack assets to pledge.
What are the main benefits of CGTMSE? CGTMSE enables micro and small enterprises to access loans up to ₹5 crore without pledging property, personal assets, or requiring a personal guarantor. Banks lend more freely under CGTMSE protection, making credit accessible to first-generation entrepreneurs and early-stage businesses. Women entrepreneurs, SC/ST borrowers, and NER enterprises receive enhanced guarantee coverage of 85%. Trading enterprises are excluded; manufacturing and service sector MSMEs are eligible.
Who is eligible for CGTMSE-covered loans? Micro and small enterprises as defined under the MSME Development Act, in manufacturing or services, are eligible. Trading enterprises are excluded. Both new and existing businesses can apply through any of CGTMSE's Member Lending Institutions (MLIs). The borrower does not apply to CGTMSE directly, the lending bank applies for the guarantee on the borrower's behalf after assessing and sanctioning the loan.
How do I get a CGTMSE-covered business loan? Approach any bank, small finance bank, or NBFC that is a CGTMSE Member Lending Institution. Apply for a collateral-free business loan and explicitly mention CGTMSE coverage. Submit your Udyam Registration, KYC, business registration, financials, and bank statements. The bank assesses the loan, applies for the CGTMSE guarantee at cgtmse.in, and disburses after approval. The Annual Guarantee Fee is typically built into the loan cost.
