Govt extends PMEGP scheme for five more years with Rs 13.5k crore outlay
Ease of Doing Business for MSMEs: The government on Monday announced the extension of its scheme for employment generation Prime Minister’s Employment Generation Programme (PMEGP) over the 15th Finance Commission Cycle from 2021-22 to 2025-26 with an outlay of Rs 13,554.42 crore. In addition, multiple modifications have also been made to the scheme including increasing the maximum financial assistance offered from existing Rs 25 lakh to Rs 50 lakh to entrepreneurs for setting up new manufacturing units and from existing Rs 10 lakh to Rs 20 lakh for new service units.
Launched in 2008-09, the scheme has supported around 7.8 lakh micro enterprises with a subsidy of Rs 19,995 crore to create employment for around 64 lakh people, the MSME Ministry said in a statement. Around 80 per cent of the units assisted under PMEGP are in rural areas and about 50 per cent units are owned by scheduled caste, scheduled tribe and women entrepreneurs. Khadi and Village Industries Commission (KVIC) is the national nodal agency of the scheme.
The scheme also modified its definition of village industry and rural area to include areas falling Panchayati Raj institutions to be accounted under rural areas and areas under municipality to be recognised as urban areas. Moreover, all implementing agencies including state and district level state offices of KVIC, state KVIBs and district industries centres have been allowed to receive and process applications in all areas irrespective of the rural or urban category.
The government said the extension will create sustainable estimated employment opportunities for about 40 lakh people in five financial years. The margin money subsidy to be given to potential entrepreneurs would be 25 per cent of the project cost in urban areas and 35 per cent in rural areas for special category applicants including SC, ST, OBC, women, transgender, physically disabled, north-eastern region, aspirational and border district applicants, according to the guidelines. For General category applicants, 15 per cent subsidy of the project cost would be provided in urban areas and 25 per cent in rural areas.
Meanwhile, the number of jobs generated under the scheme through new enterprises set up had hit a record high of 8,25,752 in FY22, the Ministry had said in April this year. Also, the number of enterprises set up during the year jumped over 1 lakh to 1,03,219 for the first time in the past 14 years. The growth in units set-up and employment created under PMEGP in FY22 was up by 39 per cent each from FY21, while the margin money distribution (subsidy) had jumped 36 per cent.
Udyogini Scheme
Udyogini means Women Entrepreneur and Government has initiated this scheme for the welfare and development of Indian Women Entrepreneurs. Udyogini Yojana has been implemented by Women Development Corporation under the Government of India.
This scheme promotes and motivates women’s entrepreneurship among the poor by providing financial support to women for doing business. Udyogini Scheme helps in the enhancement of income of an individual and families and contribute to the overall growth of the country.
| Udyogini Scheme Details – Feb 2022 | |
| Interest Rate | Competitive, subsidized or free for special cases |
| Loan Amount | Max. up to Rs. 3 lakh |
| Annual Family Income | Rs. 1.5 lakh or less |
| No income limit | For Widowed or disabled women |
| Collateral | Not required |
| Processing Fee | Nil |
Note: The mentioned interest rates are subject to change and depend on the sole discretion of the Government of India and respective banks or NBFCs.
Interest-free loans are offered to women of all sections of the society without any discrimination or preference. Udyogini Scheme is primarily offered by Karnataka State Women’s Development Corporation (KSWDC), Punjab and Sind bank, Saraswat Bank, as well as several other private and public sector banks and leading NBFCs. This scheme focuses on organizing and undertakes skill development training programs for women, besides offering financial assistance. Below mentioned are key details of this scheme:
Eligibility Criteria for Loans under Udyogini Scheme
- Business Loan available for only Women Entrepreneurs
- Should not have defaulted on any past loan with any financial institution
- Applicant with good credit score and repayment capability
Documents required
- Duly filled Application Form with passport-sized photographs
- Applicant’s Aadhaar Card, Birth Certificate
- Applicant’s Below Poverty Line (BPL) card & Ration Card
- Address and Income Proofs
- Caste Certificate, if applicable
- Copy of Bank passbook (account, bank and branch names, holder name, IFSC and MICR)
- Any other document required by the bank/NBFC
Who can Apply for a Loan under Udyogini Yojana Scheme?
Udyogini Yojana offered by several banks can be availed by aspiring women entrepreneurs across the nation. This scheme is exclusively initiated to promote women’s entrepreneurship and financial empowerment. Under this scheme, subsidized loans are offered for women entrepreneurs from rural areas.
How to Apply for a Business Loan under the Udyogini Scheme?
To apply for a business loan under this scheme or yojana, applicants can visit the nearest bank with all the required documents and fill an application form to proceed with bank formalities. Another option is that applicants can apply for loans online by visiting the official website of banks offering loans under the Udyogini scheme.
Below mentioned are the features and eligibility criteria for loans under this scheme from leading banks and NBFCs:
Udyogini Scheme from Bajaj Finserv
| Interest Rate | Interest-free loan to women from all sections of the society |
| Loan Amount | Max. up to Rs. 3 lakh |
| Loans available for | 88 SSIs – Small Scale Industries |
| Subsidy | Up to 30% |
| Family Income Criteria | Should be less than Rs. 1.5 lakh |
| Training for Skill Development | Available |
Udyogini Scheme from Saraswat Bank
| Micro Enterprises | Small Scale Enterprises | Medium Enterprises | |
| Interest Rate | 11.15% onwards | 11.15% onwards | 11.15% onwards |
| Loan Amount | Up to Rs. 2 lakh | From Rs. 2 lakh up to Rs. 50 lakh | From Rs. 50 lakh up to Rs. 100 lakh |
| Processing Fee | Rs. 5,000 | · Upto Rs. 10 lakh – Rs. 5000· Above Rs. 10 lakh and Upto Rs. 25 lakh – Rs. 7000· Above Rs. 25 lakh – Rs. 10000 | Rs. 10,000 |
| Repayment Tenure | 6 Years | 6 Years | 7 Years |
| Margin | Nil | 20%-25% lower than the Bank’s norm | 20%-25% lower than the Bank’s norm |
| Security | Hypothecation + Guarantee of Spouse or a Family member wherever required. | Hypothecation + 2 Guarantors + Collateral Security (25%) | Hypothecation + 2 Guarantors + Collateral Security (30%) |
Udyogini Scheme from Punjab & Sind Bank (PSB)
| Interest Rate – Vyapar Loan | 9.65% onwards (Working Capital Loan) |
| Loan Amount | Depends on business requirements |
| Processing Fee | Nil |
| Margin | Nil up to Rs. 25,000 |
| Security/Collateral | Nil, up to Rs. 25,000 |
| Loan Type | Term Loans and Working Capital Loans |
Udyogini Scheme from Karnataka State Women’s Development Corporation (KSWDC)
| Interest Rate | As per business requirements |
| Age Criteria | Min. 18 years and Max. 45 years |
| Loan Amount | Up to Rs. 3 lakh |
| Subsidy | Up to 50%, family income limit to be less than Rs. 2 lakh for SC/ST category |
| Family Income Criteria | No limit for women under special category and for general category – Family income should be less than Rs. 40,000 |
| EDP Training provided | For 3 days, before loan disbursal |
Note: All the above-mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the banks, NBFCs and RBI. GST and service tax shall be levied extra on the mentioned charges. Interest rates are updated as on Feb 2022.
Funding support can be availed by businesses engaged in the SSI sector, retailers, manufacturers, self-employed professionals, traders, etc. Some of the leading banks offer interest-free loans to 88 categories of SSI. Below mentioned is an exhaustive list of 88 categories that fall under SSI sector that are supported under the Udyogini Scheme:
List of 88 Business Categories supported under the Udyogini Scheme
- Agarbatti Manufacturing
- Audio & Video Cassette Parlour
- Bakeries
- Banana Tender Leaf
- Bangles
- Beauty Parlour
- Bedsheet & Towel Manufacturing
- Book Binding And Note Books Manufacturing
- Bottle Cap Manufacturing
- Cane & Bamboo Articles Manufacturing
- Canteen & Catering
- Chalk Crayon Manufacturing
- Chappal Manufacturing
- Cleaning Powder
- Clinic
- Coffee & Tea Powder
- Condiments
- Corrugated Box Manufacturing
- Cotton Thread Manufacturing
- Crèche
- Cut Piece Cloth Trade
- Dairy & Poultry Related Trade
- Diagnostic Lab
- Dry Cleaning
- Dry Fish Trade
- Eat-Outs
- Edible Oil Shop
- Energy Food
- Fair-Price Shop
- Fax Paper Manufacturing
- Fish Stalls
- Flour Mills
- Flower Shops
- Footwear Manufacturing
- Fuel Wood
- Gift Articles
- Gym Centre
- Handicrafts Manufacturing
- Household Articles Retail
- Ice Cream Parlour
- Ink Manufacture
- Jam, Jelly & Pickles Manufacturing
- Job Typing & Photocopying Service
- Jute Carpet Manufacturing
- Leaf Cups Manufacturing
- Library
- Mat Weaving
- Match Box Manufacturing
- Milk Booth
- Mutton Stalls
- Newspaper, Weekly & Monthly Magazine Vending
- Nylon Button Manufacturing
- Old Paper Marts
- Pan & Cigarette Shop
- Pan Leaf or Chewing Leaf Shop
- Papad Making
- Phenyl & Naphthalene Ball Manufacturing
- Photo Studio
- Plastic Articles Trade
- Pottery
- Printing & Dyeing of Clothes
- Quilt & Bed Manufacturing
- Radio & TV Servicing Stations
- Ragi Powder Shop
- Readymade Garments Trade
- Real Estate Agency
- Ribbon Making
- Sari & Embroidery Works
- Security Service
- Shikakai Powder Manufacturing
- Shops & Establishments
- Silk Thread Manufacturing
- Silk Weaving
- Silk Worm Rearing
- Soap Oil, Soap Powder & Detergent Cake Manufacturing
- Stationery Shop
- STD Booths
- Sweets Shop
- Tailoring
- Tea Stall
- Tender Coconut
- Travel Agency
- Tutorials
- Typing Institute
- Vegetable & Fruit Vending
- Vermicelli Manufacturing
- Wet Grinding
- Woollen Garments Manufacturing
Loans under Udyogini Scheme are offered by various financial institutions like co-operative banks, Regional Rural Banks (RRBs), and commercial banks at competitive interest rates. The scheme provides subsidies from the corporation for running business activities to only women entrepreneurs. Udyogini Scheme application form is available at the bank’s official websites.
FAQs on Udyogini Scheme
Q. What is the purpose of the Udyogini Scheme?
Ans. To promote women’s entrepreneurship and encourage the Small Scale Industry (SSI) sector by creating more employment opportunities and growth.
Q. How much loan I can get under the Udyogini scheme?
Ans. The maximum loan amount offered to a women entrepreneur under the Udyogini scheme is up to Rs. 3 lakh.
Q. Where Can I get a loan under this scheme?
Ans. Business loans offered under Udyogini schemes are offered by leading financial institutions. Some of the banks and NBFCs offering business loans under this scheme include Bajaj Finserv, Saraswat bank, Punjab and Sind Bank, Karnataka State Women’s Development Corporation (KSWDC), and many more.
Stree Shakti Package
There is a lot of focus on promoting women entrepreneurship in India with the government and financial institutions having various schemes. One such scheme promoted by the State Bank of India (SBI) is Stree Shakti Package for Women Entrepreneurs. In this article, we look at the SBI Stree Sakthi Package for women Entrepreneurs in detail.
Stree Shakti Package Eligibility
Businesses operated by women entrepreneurs are eligible to receive a loan under Stree Shakti Package. For the purpose of identifying “Women Entrepreneurs” businesses, the definition recommended by the MSME Department of India will be applicable. As per definition, a Women Entrepreneur business is “A small scale industrial unit/industry related service or business enterprise managed by one or more women entrepreneurs in proprietary concerns or in which she/they individually or jointly have a share capital of not less than 51% as partners /shareholders/Directors of Private Limited Company/Members of Co-operative Society.
Thus, women entrepreneurs or women entrepreneur business in retail trade, manufacturing or services are eligible for the scheme. Also, Women professionals like Doctors, Beauticians, Architects and Chartered Accountants can avail loan under the Stree Shakti package.
Amount of Loan
Loan in the form of term loan or working capital can be provided under the Stree Shakti package. The quantum of loan provided would be based on the borrower profile and the following guidelines:
• Retail traders: Rs. 50000 to Rs.2 Lakhs
• Business enterprises: Rs. 50000 to Rs.2 Lakhs
• Professionals: Rs. 50000 to Rs.25 Lakhs
• SSI: Rs. 50000 to Rs.25 Lakhs
As the package is aimed at Women Entrepreneurs, concessions or relaxations in the margin is in-built into the scheme along with the low floating rate of interest, linked to the base rate of the bank.
Collateral Requirement
It does not require any collateral for a loan of upto Rs.10 lakhs, extended to MSME enterprises owned by Women Entrepreneurs. Further, loans to women entrepreneurs of upto Rs.100 lakhs that can be covered under the CGTMSE scheme also requires no collateral. However, collateral is a must for any loan above Rs.1 crore or based on the borrower profile.
Documents Required
- Proof of identity: Voter’s ID Card/ Passport/ Driving License/ PAN Card/ signature identification from present bankers of the proprietor, partner or Director (if a company).
- Proof of residence: Recent telephone bill, electricity bill, property tax receipt/ Passport/ Voter’s ID Card of the proprietor, partner or Director (if a company).
- Proof of business address
- Proof of Minority
- Last three years balance sheets of the units along with income/sales tax returns etc.
- Memorandum and articles of association of the Company/ Partnership Deed of partners etc.
- Assets and liabilities statement of promoters and guarantors along with latest income tax returns.
- Rent Agreement (if business premises on rent) and clearance from pollution control board if applicable.
- SSI registration if applicable.
- Projected balance sheets for the next two years in case of working capital limits and for the period of the loan in case of term loan.
- In case of takeover of advances, sanction letters of facilities being availed from existing bankers/ Financial Institutions along with detailed terms and conditions.
- Profile of the unit (includes names of promoters, other directors in the company, the activity being undertaken, addresses of all offices and plants, shareholding pattern etc.
- Last three years balance sheets of the Associate/Group Companies (If any).
- Project report (for the proposed project if term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like capacity of machines, capacity utilization assumed, production, sales, projected profit and loss and balance sheets for the next 7to 8 years till the proposed loan is to be paid, the details of labour, staff to be hired, basis of assumption of such financial details etc.
- Review of account containing month wise sales (quantity and value both), production (quantity and value), imported raw material (quantity and value), indigenous raw material (quantity and value), value of stocks in process, finished goods (quantity and value), debtors, creditors, bank’s outstandings for working capital limits, term loan limits, bills discounted.
- Photocopies of lease deeds/title deeds of all the properties being offered as primary and collateral securities.
- Position of accounts from the existing bankers and confirmation about the asset being Standard with them (In case of takeover).
- Manufacturing process if applicable, the major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, details about major competitors and the company’s strength and weaknesses as compared to their competitors etc.
Cent Kalyani
Both the government and private sectors are working towards developing the Economy by bringing financial assistance to entrepreneurs. One of the major initiatives is the Cent Kalyani Scheme for women entrepreneurs. The scheme aims at helping women establish their own businesses or expand the existing one.
What is Cent Kalyani Scheme? Cent Kalyani Scheme is a unique loan scheme from the Central Bank of India. It aims at financing women’s business dreams and helps them expand their business too. This means, women can apply for this scheme to fund their working Capital, purchasing machinery or equipment or other relevant business needs. Women from micro and small enterprises can avail this loan scheme.
Cent Kalyani Scheme- Loan Amount & Interest Rate Under the Cent Kalyani Scheme, an applicant can avail a loan up to Rs. 100 lakhs along with a margin rate of 20%. The base interest rate is 9.70%. Cent Kalyani Scheme Loan Amount (INR) Interest Rate (%) Rs. 10 lakhs 9.70% + 0.25% = 9.95% Rs. 10 lakhs-100 lakhs 9.70% + 0.50% = 10.20 Purpose of Cent Kalyani Scheme Listed below are the purpose of the scheme- 1. To Cater One of the main objectives of Cent Kalyani Scheme is to cater women entrepreneurs and help them through various government priorities such as offer them jobs, loans, subsidies, etc. 2. To Identify Another objective is to identify women with needs and encourage them by giving financial assistance to achieve their goals. 3. To Guide One of the major motto objectives behind the scheme is to guide women with business expansion and other business needs. 4. To Co-ordinate One of the main objectives is to coordinate with government and non-government organisations to help more women to gain benefits from the bank’s scheme. Eligibility for Cent Kalyani Scheme Women involved in the following trade deals can apply for this scheme:.
Professionals (Doctors, Chartered Accountants, Architects, etc) Self-employed (Catering services, canteen service, beauty parlour, boutiques, daycare centres, tailoring services, etc) Documents Required for Cent Kalyani Scheme Following are the documents to be submitted: 1. Identity Proof Voter Id Passport Driving license PAN Card KYC documents 2. Address Proof Telephone bill Property tax Receipt Electricity bill Voter’s ID card 3. Income Proof Balance sheets Profit and loss account Other financial documents 4. Business Proof Profile of business enterprise Letters of Interest, understanding, continuity and hypothecation.
NSIC Credit Facilitation
To meet the credit requirements of MSME units, NSIC has entered into a Memorandum of Understanding with various Nationalized and Private Sector Banks. Through syndication with these banks, NSIC facilitates MSME in accessing credit support (fund based or non-fund based limits) from the banks. NSIC assists MSMEs in completion of the documentation for submitting the proposals to the banks and also does the follow up with the banks. These handholding support are provided by NSIC without any cost to the MSMEs.
| Name of the Bank | Website |
|---|---|
| Yes Bank | www.yesbank.in |
| IndusInd Bank Ltd. | www.indusind.com |
| Federal Bank. | http://www.federalbank.co.in |
| Kotak Mahindra Bank | www.kotak.com |
| ICICI Bank | https://www.icicibank.com |
| AU Small Finance Bank | https://www.aubank.in |
| Bank of Maharashtra | www.bankofmaharashtra.in |
| Bank of Baroda | www.bankofbaroda.in |
| Axis Bank | www.axisbank.com |
| State bank of India | http://www.sbi.co.in |
| Central bank of India | www.centralbankofindia.co.in |
| Canara Bank | www.canarabank.in |
| Tata Capital Financial Services Ltd. | www.tatacapital.com |
| Cointribe Technologies | www.cointribe.com |
| Union Bank of India | https://www.unionbankofindia.co.in |
| HDFC | https://www.hdfcbank.com/ |
| Karnataka Bank | https://karnatakabank.com |
Sthapan
FINANCIAL ASSISTANCE
- Financial assistance to Greenfield Units for setting up new units which includes:
- purchase of land,
- construction of factory building,
- purchase of equipment, plant & MFA etc.
Key Features
- Attractive RoI
- Quicker sanction
Eligibility
- New Entities or Greenfield units are eligible
- Promoters should have minimum 5 years of business experience
- Promoters Contribution – Minimum 25% Standard Norms apply (CIBIL / CMR, due diligence checks etc.)
Target Groups
MSMEs setting up units in identified sectors under (as per the list identified by GoI), high growth / sunrise sectors and other important sectors
Loan Amount & Validity
- TL upto `2000 Lakh, subject to maximum of 75% of the project cost
- Till October 31, 2022 (or) utilization of the corpus as allocated/decided from time to time, whichever is earlier.
Rate of Interest
- Interest Rate- 6.00% to 7.30% p.a. for first year with reset applicable thereafter (as per internal rating)
- Repayment – Generally upto 7 years
- Moratorium – Upto 2 years
Details : Click here
Ubharte Sitare Programme
Target Group
- Future export champions with high potential
- Units having unique technology, products or processes
- High export potential sectors, i.e. Automobiles, Aerospace & Defence, Chemicals, Food Processing, IT & ITeS, Pharmaceuticals, Precision engineering, Textiles and allied sectors, etc.
Loan Amount
- Need based financial assistance, subject to maximum of 80% of the project cost.
- Joint financing with EXIM Bank available.
Key Features
- Attractive RoI
- 20% promoters’ contribution (30% for greenfield units)
- Facility of TL/FCTL available
- Technical Assistance for mentorship support, equity support, etc.
- Upto 25 bps performance / milestone linked interest incentive.
Interest Rate
- Interest Rate – Based on MCLR of the Bank / Repo rate, with applicable spreads (as per internal rating)
- Repayment – Generally upto 6 years (Extendable upto 10 years)
- Moratorium – Upto 2 years
Eligibility
- New units – Promoters having sufficient experience in the proposed line of business and major projected revenue from exports. For units co-funded by technocrats from premier institutions (like IIT, IIM, IISc, NIT etc.), sufficient experience in the proposed line of business shall not be insisted upon.
- Existing units – Fundamentally strong export oriented small and mid-sized companies with satisfactory financials.
- Standard Norms apply (CIBIL / CMR, due diligence checks, etc.)
Details : Click here
Sangam Scheme
SIDBI AND GOOGLE PARTNERSHIP FOR ASSISTANCE TO MICRO ENTERPRISES (SANGAM)
Objective :
Financial assistance shall be provided in the form of term loans to micro enterprises for Capex or meeting working capital requirement.
Key Features :
- Up to 100% finance
- Funding of both Capex and working capital requirement.
- Nil processing fee.
- Interest rate of 6% p.a. (5.50% p.a. for women run / owned enterprises).
- Repayment upto 5 years (3 years for WCTL).
- Availability of CGTMSE cover.
Eligibility
- Term loans to Micro enterprises.
- Minimum 2 years operations of the unit required.
- WCTL shall be provided to only those enterprises not availing WCL / OD facility from any Banks / FIs.
- Operating profit during past 2 years.
- Cash profit during past one year.
- No default / delinquency to any bank /FI, etc., during past 24 months.
- Standard Norms apply (CIBIL / CMR, due diligence checks etc.)
Target Group
Preference to women run / owned enterprises and entrepreneurs from smaller cities (beyond Metros).
Loan Amount
- TL upto 100 Lakh, subject to maximum 40% of the Net Sales for manufacturing units and 75% of Job work income / gross receipts for job work / service sector enterprises.
- Upto March 31, 2022 for sanctions.
Interest Rate
Interest Rate- Interest rate of 6% p.a. (5.50% p.a. for women run / owned enterprises).
Details : https://www.sidbi.in/en/products#section19
STEP Scheme
SIDBI’S TERM LOAN TO ENHANCE PRODUCTION OF MSMES (STEP) SCHEME GUIDELINES
Objectives
- To provide medium/short term financial assistance to eligible MSMEs for augmenting NWC and / or to execute urgent confirmed orders.
- Incremental working capital requirement may also be funded after satisfying about non enhancement of regular WC limit from existing lenders.
Key Features
- Both in rupee and foreign currency.
- Generally, upto 3 years (including moratorium upto 6 months).
- Availability of CGTMSE cover
- Simplified documentation
- Quick sanction and disbursement
Eligibility
- Existing MSMEs as per MSMED Act
- Minimum 3 years operations of the unit required. (2 years for Existing customer of SIDBI)
- WCTL shall be provided to only those enterprises not availing WCL / OD facility from any Banks / FIs.
- Operating profit during past 2 years ( 1 year for Existing Customers).
- Standard Scheme Norms apply (CIBIL / CMR, due diligence checks etc.)
- should not be in default to any bank/FI.
Target Group
Micro, Small and Medium Enterprises
Loan Amount
- Upto Rs 300 lakh for existing customers
- Upto Rs 200 lakh for New Customers
Interest Rate
MCLR based ROI as per internal rating.
Details : Click here
CGTMSE Scheme
Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) is a trust established by the Government of India, under the Ministry of Micro, Small and Medium Enterprise (MoMSME) and Small Industries Development Bank of India (SIDBI). Launched in 2000, the CGTMSE scheme offers credit guarantees to financial institutions that offer loans to Micro and Small Enterprises (MSEs). CGTMSE scheme provides credit guarantees from 75% to 85% to medium and small enterprises.
Credit Guarantee under CGTMSE Scheme
Credit Guarantee refers to a situation where the loan to the applicant is backed by a party without the need for any external collateral or third-party guarantee. Here, the loan sanctioned by the member lending institution is backed by the scheme which provides the guarantee cover for a large portion of the loan amount. Under the CGTMSE scheme, both new and existing micro and small enterprises, including manufacturing and service enterprises are eligible for a credit facility up to Rs. 2 crores.
Features of CGTMSE
| Interest Rates | As per RBI’s Guidelines is eligible for coverage under CGTMSE |
| Eligible Activities | · Manufacturing and Services including Retail trade is allowed· Educational and Training institutions, Self Help Groups (SHGs), and agriculture-related activities are not eligible |
| Loan Amount | · For Micro and Small Enterprises (MSEs)– Credit facility up to Rs. 200 lakh can be covered on an outstanding basis· For Regional Rural Banks (RRBs) and Select Financial Institutions credit facility up to Rs. 50 lakh is allowed |
| Guarantee Coverage | From 75% – 85% (50% Coverage for retail activity) |
| Collateral / Third Party Guarantee | Not required |
Eligibility Criteria
Lending institutions that provide funding support to specific sectors are in agreement with the CGTMSE scheme. The entities and institutions that are eligible to avail business loans under the CGTMSE scheme are as follows:
Borrowers
- All Existing and New Micro and Small Enterprises (MSEs)
Lending Institutions
- Scheduled Commercial Banks (SCBs)
- Regional Rural Banks (RRBs)
- Small Finance Banks (SFBs)
- Non-banking Financial Companies (NBFCs)
- Small Industrial Development Bank of India (SIDBI)
- National Small Industries Corporation (NSIC)
- North Eastern Development Finance Corporation Ltd. (NEDFi)
Small and Micro-Enterprises owned and/or operated by Women Entrepreneurs are eligible for a Guarantee Cover of 80%, whereas all the credit/loans in the North East Region (NER) for credit facilities are eligible for a guarantee of Rs. 50 lakh.
Educational institutions, agriculture, training institutions, and Self-Help Groups (SHGs) are not eligible for guarantee cover under CGTMSE.
The CGTMSE loan limit solely depends on the applicant’s profile and business requirements.
CGTMSE Guarantee
Any collateral / third party guarantee free credit facility in form of both fund-based and non-fund based) offered by eligible institutions to new and existing Micro and Small enterprises, including Service Enterprises, with a maximum credit cap of Rs. 2 crores are eligible to be covered.
CGTMSE coverage includes the below-mentioned criteria:
a) The trust guarantees up to 75% of the defaulted principal amount (up to 85% of the defaulted principal amount for a select category of borrowers). The cover comes with a maximum guarantee cap of Rs. 37.50 lakh for the credit facilities up to Rs. 50 lakh.
b) The term credit including interest on the principal is covered for a period of one-quarter and/or outstanding capital advances including the interest, as on the date of the account becoming a Non-Performing Asset (NPA) or as on the date of filing the suit (whichever is lower).
c) Other charges, such as penal interest, commitment charge, service charge, or any other levy/ expenses do not qualify for the guarantee cover.
Below mentioned is the detailed information on the coverage limit under CGTMSE:
Source: www.cgtmse.in
Modified AGF Structure – Standard rate (SR)
| Annual Guarantee Fee (AGF) [% p.a.]* | ||
| Credit Facility | Women, Micro Enterprises and Units covered in North East Region | Others |
| Up to Rs. 5 Lakh | 1.00 + Risk Premium as per extant guidelines of the Trust | |
| Above Rs. 5 Lakh and up to Rs. 50 Lakh | 1.35 + Risk Premium as per extant guidelines of the Trust | 1.50 + Risk Premium as per extant guidelines of the Trust |
| Above Rs. 50 Lakh and up to Rs. 200 Lakh | 1.80 + Risk Premium as per extant guidelines of the Trust |
*AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facility.
Documents required for loan application
Below stated are the documents required for a Loan under the CGTMSE scheme and its coverage:
- Duly filled CGTMSE loan application form with passport-sized photographs
- Business Incorporation or Company Registration Certificate
- Business Project Report
- CGTMSE Loan Coverage Letter
- Copy of loan approval from the Bank
- Any other document required by the Bank
CGTMSE also provides rehabilitation assistance to the business units. If a business unit is in a bad condition due to factors that are beyond the control of the management, then CGTMSE covers the loan for rehabilitation extended by the lender within the credit cap of Rs. 1 crore.
How to get Loan under the CGTMSE Scheme
The objective of the CGTMSE is to enable the banks to look at small and micro businesses with objectivity and give more importance to the project viability and business model validation. To cover the loan under the credit guarantee fund scheme, the borrower has to pay an additional guarantee fee and service charge in addition to the interest charged by the bank. The current CGTMSE fee is payable at the rate of 1.5%. It is payable at 0.75% for the North-Eastern region including the state of Sikkim.
The procedure for getting a loan under CGTMSE is as follows:
Step 1. Formation of the Business Entity
Before even starting the procedure for loan approval under the CGTMSE, the borrower has to incorporate a private limited company, limited liability partnership, one-person company, or a proprietorship according to the nature of the business and obtain necessary approvals and tax registrations for executing the project.
Step 2. Preparing a Business Report
Borrowers need to conduct a market analysis and prepare a business plan containing relevant information, such as business model, promoter profile, projected financials, etc. The report is then presented to the credit facility and an application is filed for getting the loan under the CGTMSE scheme. However, businesses should consider that such project reports be prepared by experienced professionals. This shall increase the chances of approval.
Step 3. Sanctioning of Loan from the Bank
The request for a bank loan usually contains credit terms and working capital facilities. After the application and business plan are under process, banks carefully analyze the viability of the business model and process the loan application, and accord sanction, as per the bank’s policy.
Step 4. Obtaining the Guarantee Cover
After the loan is sanctioned the bank applies to CGTMSE authority and obtains the guarantee cover. If the loan is approved by CGTMSE, the borrower will have to pay the guarantee fee and service charges. The CGTMSE loan application form can be downloaded from its official website.
The extended list of MLIs under the CGTMSE scheme contains 141 banks including all the major rural, urban, public sector, and private sector banks of India. The list contains some of the larger banks, such as the State Bank of India, United Bank of India, Punjab National Bank, etc.
Note: CGTMSE does not grant any loan, credit facilities, subsidies and nor does it have any Loan Agents, Agencies for arranging loans, or credit guarantees offered via its MLIs.
