MSME Credit Guarantee Scheme (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was launched by the Ministry of MSME and SIDBI to facilitate the flow of institutional credit to the MSME sector. The primary objective is to provide credit guarantees to lenders, enabling them to offer collateral-free loans to new and existing micro and small enterprises. By mitigating the risk for financial institutions, the scheme encourages lending to viable projects that lack traditional security or third-party guarantees. Under this scheme, the trust covers a significant portion of the credit facility in case of default. It encompasses both term loans and working capital facilities. Recent reforms have enhanced the credit limit and reduced guarantee fees to further support small-scale entrepreneurs and promote industrial growth across India.