CGTMSE Explained: Guarantee Fee, Eligibility and Lenders
Reviewed by: WeCredit Research Team
CGTMSE does not give loans. It guarantees the loan a bank or other member lender gives to a micro or small enterprise, so the lender can lend without asking for collateral or a third-party guarantee. The guarantee ceiling is Rs. 10 crore per borrower for approvals from 1 April 2025.
Quick answer: you do not apply to CGTMSE. You apply to a bank or other member lending institution for a collateral-free MSE loan, and the lender decides whether to seek CGTMSE cover. WeCredit does not sanction government scheme loans. Confirm current details on cgtmse.in before you apply.
CGTMSE at a Glance
| Item | What the official sources say |
|---|---|
| What it is | A credit guarantee scheme for micro and small enterprises, run by the Credit Guarantee Fund Trust for Micro and Small Enterprises |
| Who it helps | Micro and small enterprises, including first-generation entrepreneurs, women-led enterprises and units in backward districts |
| Does it lend? | No. It only guarantees collateral and third-party-guarantee-free credit given by member lending institutions |
| Guarantee ceiling | Rs. 10 crore (raised from Rs. 5 crore) from 1 April 2025 |
| Subsidy | None. It is a guarantee, not a subsidy |
| Status | Active |
How the Guarantee Works
A bank lends to your enterprise without taking collateral. It then covers part of its risk by registering the loan with CGTMSE and paying an annual guarantee fee. If the loan turns bad, CGTMSE compensates the lender for its guaranteed share. You remain fully liable to repay the loan. The guarantee protects the lender, not you.
Annual Guarantee Fee (From 1 April 2025)
CGTMSE Circular 251/2024-25 of 18 March 2025 set these standard annual guarantee fee rates for guarantees approved or renewed on or after 1 April 2025. The Ministry of MSME describes the change as a 50% cut in the standard rate, to as low as 0.37% a year.
| Credit facility slab | Annual guarantee fee (per year) |
|---|---|
| Up to Rs. 10 lakh | 0.37% |
| Above Rs. 10 lakh to Rs. 50 lakh | 0.55% |
| Above Rs. 50 lakh to Rs. 1 crore | 0.60% |
| Above Rs. 1 crore to Rs. 2 crore | 0.85% |
| Above Rs. 2 crore to Rs. 5 crore | 1.00% |
| Above Rs. 5 crore to Rs. 8 crore | 1.10% |
| Above Rs. 8 crore to Rs. 10 crore | 1.20% |
Who pays the fee? The lender decides. Under the scheme the lender may pass the fee on to you or bear it itself. Ask in writing whether it will be added to your loan cost. Special rates and discounts can apply to some categories, so ask your lender which one applies to you.
Note for readers: the fee page on cgtmse.in may still show the older 2023 structure, so rely on the 2025 circular above and ask your lender for the rate it will apply.
Who Can Benefit (Eligibility)
- The borrower must be a micro or small enterprise. Register on Udyam so lenders can confirm your category.
- The loan must come from a member lending institution. Scheduled commercial banks take part in the scheme. Regional rural banks and some financial institutions are also members.
- CGTMSE lists enhanced support for women and transgender entrepreneurs, SC/ST owners, persons with disabilities, informal micro enterprises, ZED-certified units, and residents of Jammu and Kashmir and Ladakh.
- Enterprises in identified credit-deficient districts get a 10% discount on the guarantee fee and 5% additional guarantee coverage.
- Transgender entrepreneurs get a 10% fee concession and 85% guarantee coverage, effective 1 March 2025.
The share of the loan that CGTMSE guarantees, and the list of credit facilities the scheme excludes, differ by category. Check the scheme document on cgtmse.in or ask your lender for the figures that apply to you.
Collateral Rules to Know
Per the Ministry of MSME, banks cannot ask for collateral on MSE loans up to Rs. 20 lakh under the RBI Master Direction dated 9 February 2026. For larger loans, CGTMSE cover is one way a lender can offer credit without collateral, but the lender still decides whether to lend.
Documents Lenders Usually Ask For
There is no CGTMSE application form for borrowers. The lender sets the document list, and it commonly includes:
- Aadhaar, PAN and address proof of the owner
- Udyam registration certificate
- Bank statements and, where asked, ITR or financials
- Business address or licence proof
- Project report or working capital estimate
How to Get a CGTMSE-Backed Loan: Step by Step
- Register on Udyam if you have not already.
- Choose a member lending institution and ask for a collateral-free loan under the credit guarantee scheme.
- Submit KYC, business and financial documents to the lender.
- The lender appraises the loan and decides on sanction. If it sanctions the loan, it registers the guarantee with CGTMSE.
- Check the sanction letter for the interest rate, any guarantee fee passed on to you, and the confirmation that no collateral is taken.
CGTMSE vs Mudra vs a Private Business Loan
| CGTMSE-backed loan | Mudra | Private MSME loan | |
|---|---|---|---|
| What it is | A guarantee that backs a bank loan | A loan category for small non-farm businesses | A lender’s own product |
| Who sets the interest rate | The lender | The lender | The lender |
| Collateral | Not taken on guaranteed loans | Not taken up to the Mudra limit, per lender terms | Depends on lender and product |
Read the detailed comparison in CGTMSE vs Private MSME Loan. For micro tickets, see the Mudra loan guide.
Common Mistakes
- Looking for a CGTMSE application form. Borrowers do not apply to CGTMSE directly.
- Assuming the guarantee means approval. The lender still checks repayment capacity. See why business loans get rejected.
- Assuming the guarantee removes your liability. You must still repay the loan in full.
- Not asking who pays the guarantee fee.
- Trusting lookalike sites. CGTMSE warns that websites ending in “-govt” or “-gov” are unauthorised. Its official site is cgtmse.in and its toll-free number is 1800 222 659.
Frequently Asked Questions
Does CGTMSE give loans directly?
No. CGTMSE states that it does not provide any financial assistance. It only guarantees credit given by its member lending institutions.
What is the maximum guarantee?
Rs. 10 crore, raised from Rs. 5 crore with effect from 1 April 2025, according to the Ministry of MSME.
What does the guarantee cost?
An annual guarantee fee of 0.37% to 1.20% a year, depending on the loan slab, as shown in the table above. The lender may pass it on to you.
Is the CGTMSE scheme still active in 2026?
Yes. The Ministry of MSME reported a Rs. 10 crore ceiling and lower fees in force in 2025, and a July 2026 release describes the scheme as running.
Can I get a loan without collateral under CGTMSE?
The scheme exists to support collateral-free and third-party-guarantee-free loans to eligible enterprises. Whether you get one depends on the lender’s appraisal.
Can I apply on the CGTMSE website?
No. You apply to a member lending institution. The CGTMSE site publishes scheme documents and circulars for reference.
Does WeCredit sanction CGTMSE loans?
No. WeCredit does not sanction government scheme loans. We compare loan options and explain how schemes work. Confirm current terms with the lender and on the official source. See also our government business loan eligibility guide, the MSME online apply guide and our government loan schemes hub.
Official Sources
- CGTMSE official website
- CGTMSE Circular 251/2024-25 on annual guarantee fee (18 March 2025)
- PIB: Ministry of MSME on the Credit Guarantee Scheme (23 July 2026)
- PIB: Year End Review 2025, Ministry of MSME
- PIB: Union Budget 2025-26 announcement on credit guarantee cover
- Udyam Registration portal
