Quick answer: CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) does not lend money. It guarantees loans that banks and other member lenders give to micro and small enterprises without collateral or a third-party guarantee, for loans up to ₹10 crore as of October 2026. For businesses owned by women, the guarantee covers 90% of the amount in default, which makes a bank more willing to lend to you on the strength of your business alone.
What CGTMSE is, and what it is not
CGTMSE is a credit guarantee trust. Its job is to reduce a lender’s risk. If your loan is covered and you default, CGTMSE pays the lender a large share of the loss. That promise is what lets a bank say yes without asking for your house, flat or a guarantor.
Three things to be clear about:
- You never apply to CGTMSE. CGTMSE states that it deals only with its member lending institutions (MLIs), which it describes as banks, Regional Rural Banks and select financial institutions. You apply for a loan at the bank; the bank applies for the guarantee.
- It is not a subsidy or grant. The loan is a normal loan. You repay all of it, with interest.
- It has no agents. CGTMSE’s own website warns about look-alike websites and says it does not provide financial assistance directly. Anyone offering a “CGTMSE loan” for a fee is not CGTMSE.
Who qualifies
According to SBI’s CGTMSE page and the consolidated scheme features (2025):
- Micro and small enterprises (MSEs) as defined by the Ministry of MSME. Medium enterprises are not covered by this scheme.
- New and existing businesses in manufacturing, services and trading. Retail and wholesale trade have been treated on par with other segments since 1 December 2022.
- Udyam Registration is mandatory. The scheme features state that a Udyam Registration Certificate is required for guarantee applications lodged on or after 16 January 2023. If you do not have one, register first on the official Udyam portal.
- Term loans, working capital or both, sanctioned to a single eligible borrower.
- No collateral or third-party guarantee on the covered amount. A personal guarantee from the proprietor or partners does not count as a third-party guarantee. Under the “hybrid security” option, a bank can take collateral for part of the loan and cover the rest with CGTMSE.
Not eligible: loans to self-help groups (SHGs) are excluded under the scheme features.
What you get: guarantee cover by category
The size of the guarantee depends on who owns the business and the loan amount. These figures apply to guarantees approved on or after 1 April 2025, as given in the scheme features published by SBI:
| Borrower category | Loan up to ₹5 lakh | Above ₹5 lakh to ₹50 lakh | Above ₹50 lakh to ₹10 crore |
|---|---|---|---|
| Women entrepreneurs | 90% | 90% | 90% |
| Micro enterprises (general) | 85% | 75% | 75% |
| SC/ST, persons with disability, Aspirational Districts, ZED-certified MSEs | 85% | 85% | 85% |
| North East Region, J&K and Ladakh | 80% | 80% | 75% |
| All others | 75% | 75% | 75% |
MSEs located in identified credit-deficient districts get an extra 5% cover on top of the applicable rate.
The cover goes to the bank, not to you. But it matters to you: at 90%, the bank’s own risk on your loan is small, so a well-prepared application from a woman-owned unit is easier to approve.
The ceiling was raised from ₹5 crore to ₹10 crore for guarantees approved on or after 1 April 2025.
Fees: the annual guarantee fee
The lender pays CGTMSE an annual guarantee fee (AGF), upfront for the first year and every year after that while the guarantee runs. SBI publishes these standard rates, excluding GST, effective 1 April 2025:
| Loan amount | Standard annual guarantee fee |
|---|---|
| Up to ₹10 lakh | 0.37% |
| Above ₹10 lakh to ₹50 lakh | 0.55% |
| Above ₹50 lakh to ₹1 crore | 0.60% |
| Above ₹1 crore to ₹2 crore | 0.85% |
| Above ₹2 crore to ₹5 crore | 1.00% |
| Above ₹5 crore to ₹8 crore | 1.10% |
| Above ₹8 crore to ₹10 crore | 1.20% |
Women get a 10% discount on the fee. The scheme features list a 10% concession on the AGF for women, SC/ST and PwD borrowers, with further 10% concessions for some locations and ZED-certified units, up to a maximum discount of 30%.
Who actually pays? The fee is payable by the lender. Whether the bank passes it on to you is its own decision. Many do, so ask the branch to show the guarantee fee separately in your sanction letter.
How it fits with Mudra and the RBI’s ₹20 lakh rule
- Small loans: RBI’s amended directions on lending to MSMEs, effective 1 April 2026, raise the limit up to which banks must not take collateral from micro and small enterprises to ₹20 lakh. Loans up to ₹20 lakh under PM Mudra Yojana are covered by a different fund, CGFMU, not CGTMSE.
- Above ₹20 lakh: this is where CGTMSE matters most. Without it, a bank would normally ask for property or a guarantor. With it, a micro or small enterprise can seek collateral-free loans up to ₹10 crore.
How to ask your bank, step by step
- Get your basics in order. Udyam Registration, PAN, Aadhaar, GST registration if applicable, current account statements for the last 6 to 12 months, and income tax returns if you have filed them.
- Prepare a project report. For a new unit or expansion, the bank will want the project cost, how you will fund it, and projected profit, cash flow and repayment for the loan period. See our guide on writing a project report a bank will accept.
- Choose your branch. Start with the bank where you already have a current account. A banker who has seen your transactions for a year is more likely to support you.
- Ask directly for CGTMSE cover. Say clearly: “I want this loan without collateral, under CGTMSE.” Mention that the business is woman-owned, since that puts it in the 90% cover category.
- Submit the application with documents. For many banks you can also start online on the JanSamarth portal.
- Read the sanction letter. Check the interest rate, processing fee, the guarantee fee and who pays it, and that no collateral or third-party guarantee is listed against the covered amount.
- Keep repaying on time. The guarantee has a lock-in period of 18 months before the bank can claim, reduced to 9 months for loans up to ₹10 lakh with a repayment period of up to 36 months. Regular repayment also builds the record you need for a larger loan later.
Common reasons applications fail
- No Udyam Registration at the time the bank applies for cover.
- A weak or copied project report with sales figures that do not match your bank statements.
- Poor credit history, including old overdue credit cards or personal loans.
- Loan purpose unclear, or mixed with personal spending.
- The bank prefers collateral. Above the RBI’s ₹20 lakh threshold, whether to use CGTMSE is the bank’s decision. If one branch refuses, ask for the refusal reason in writing and try another bank.
- Ownership on paper does not match. If you say the business is woman-owned, the Udyam certificate, GST and bank account must all show you as proprietor or the majority partner or director.
FAQ
Q: Can I apply to CGTMSE directly?
A: No. You apply for a loan at a bank or other member lending institution. The bank seeks the guarantee from CGTMSE.
Q: What is the maximum loan covered?
A: ₹10 crore per eligible borrower, for guarantees approved on or after 1 April 2025.
Q: Is the 90% cover only for small loans?
A: No. Under the scheme features, the 90% cover for women entrepreneurs applies across the full range up to ₹10 crore.
Q: Will I pay the guarantee fee?
A: The fee is payable by the lender, which may pass it on to you. Women borrowers get a 10% discount on the standard fee. Ask for the fee to be shown in your sanction letter.
Q: Does a trading business or a shop qualify?
A: Yes. Retail and wholesale trade are covered on par with manufacturing and services since 1 December 2022.
Q: Can my self-help group get a CGTMSE-covered loan?
A: No. Loans to SHGs are excluded. An individual member running her own registered micro enterprise can apply in her own name.
Q: Does CGTMSE fix the interest rate?
A: No. The interest rate is set by the lender. Compare offers from more than one bank.
Official links
- CGTMSE: https://www.cgtmse.in
- SBI CGTMSE scheme page: https://sbi.bank.in/web/business/sme/sme-government-schemes/cgtmse
- Udyam Registration: https://udyamregistration.gov.in
- JanSamarth loan portal: https://www.jansamarth.in
- RBI press release on MSME lending amendments (₹20 lakh collateral-free limit): https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=62190
Last checked: October 2026. Rules, limits and fees change; confirm with the official source before you apply. This guide is general information, not legal, tax or financial advice.
Sources: CGTMSE website (October 2026); SBI CGTMSE scheme page, updated August 2025 (October 2026); CGTMSE consolidated scheme features published by SBI (October 2026); UCO Bank FAQs on CGTMSE (December 2023); RBI press release on MSME lending amendment directions (February 2026); StudyCafe report on CGTMSE ceiling enhancement circular (March 2025)
