All You Need To Know About CGTMSE Loan Scheme
What is CGTMSE Loan Scheme?
The Ministry of Micro, Small, and Medium Enterprises of the Indian government created the CGTMSE scheme. It aims to strengthen the credit distribution system and make credit more accessible to MSEs (Micro and Small Enterprises).
CGTMSE loan offers a concept and its execution by providing financial assistance to micro and small businesses. Eligible enterprises can acquire a loan of up to one crore from banks and financial institutions under the CGTMSE scheme.
Moreover, the CGTMSE plan focuses on providing loans to first-generation entrepreneurs. It will thrive them in a competitive environment without getting worried about the security or third-party guarantees. Additionally, financial institutions are given cover for the lack of security to fund SMEs or MSME loans. Small Indian entrepreneurs run these up to a particular amount.
What Are The Features Of the CGTMSE Scheme?
A CGTMSE scheme has many features. One of the best features of this scheme is that it gives employment to many young people. This scheme helps them by removing the financial hurdles coming before them. It will provide business loans to overcome business problems. Some of the other features include:
- Provides interest rates
- Credit facilities
- Coverage guarantee
- Easily access loans from any bank or institution.
Additionally, the CGTMSE also assists the business units with recovery. If a business unit is in terrible condition due to circumstances beyond the management’s control, the CGTMSE will reimburse the lender’s rehabilitation loan. It will go up to a credit limit of INR 1 crore.
What are The CGTMSE Loan Eligibility Criteria?
The government has established easy eligibility requirements for CGTMSE loans to make financing available to all micro and small businesses. The CGTMSE financing plan is open to any registered firm with a viable business idea, and it is known to both new and existing companies.
Under the CGTMSE loan, both the providers and borrowers are required to qualify the eligibility criteria for the loan. Below are the eligibility norms for both the providers and borrowers.
Lending Institutions
It includes all scheduled commercial banks, designated Regional Rural Banks, SIDBI, NSIC, NEDFi, SFB, and NBFCs. Also, they should lend to the relevant sector and have entered into a lending agreement with CGTMSE or the Trust. These are known as Member Lending Institutions (MLIs).
Lending Borrowers
The CGTMSE loan covers new SMEs as one of the eligibility criteria. It states the credit facility should be a minimum of INR 50 lakhs or a maximum of 1 crore. Term credit for the total outstanding amount is a non-performing asset on the date the loan is designated. It can also be dated when a lawsuit is filed.
What Are Essential Documents For CGTMSE Loan?
Obtaining a credit facility or loan from a lender necessitates a sequence of procedures on the borrower’s behalf. This is to ensure a smooth transaction. The following are the primary documents in the CGTMSE lending scheme:
- Loan Application Form
- Two passport size photographs
- Submission of project report
- Business Registration Certificate
- Copy of loan approval
- Guarantee CGTMSE loan cover letter
How To Get The CGTMSE Loan?
To get the loan scheme for Credit Guarantee Card Scheme without any collateral security, you must follow the below steps. These steps will help you in getting a bank loan under the CGTMSE scheme.
Formation of a Business
Incorporate a Private Limited Company or LLP, as per the firm requirements. It also requires tax registrations and permits for doing business / executing the project before applying for a loan under the CGTMSE Scheme.
Prepare Project Report
Conducting a market analysis for preparing a business plan or project report. It includes details such as the business model, promoter profile, predicted financials, and so on. Professionals with prior expertise must submit the project report. For example: if you are looking for a business loan in Lucknow, then you must prepare all the documents ready.
Get Sanction For Bank Loan
Submit the project report to the appropriate banks that give loans under the CGTMSE Scheme. Also, ask for a bank loan to be sanctioned by the banks under the CGTMSE Scheme.
Term loans and working capital facilities can also be included in a bank loan request. According to the bank’s policy, they will process your application, and then you will be provided with the bank loan under this scheme.
Obtain A CGTMSE Cover
Once the bank loan has been approved, the bank will apply to the CGTMSE organization. Then, you can receive a cover under the CGTMSE program for the loan. The loan will be under the CGTMSE scheme once accepted by the CGTMSE organization. The borrower needs to pay the CGTMSE guarantee and CGTMSE service charge.