How to get a Collateral-free business loan in CGTMSE – Get business Loan Without Security
How can I get a business loan without collateral?- The MSME Act, 2006 is designed to assist and protect Micro, Small, and Medium Enterprises. Under this, a lot of efforts are made to develop and promote small and mid-sized industries. Many schemes have been brought in these efforts, with the help of which MSME Enterprises has been made better for unsecured business loans for startups.
Startup business loans, the Government of India has made changes in the CGTMSE scheme and implemented it again. In which now MSME industry can get a loan without any guarantee or bail, just like a business loan is available in the Mudra scheme. So if you want to start your business, CGTMSE Scheme can help you in providing Small Business Loan Without Collateral.
What is the CGTMSE Scheme and How to Get Collateral-free Business Loan
Best Small Business Loans of 2020- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was established on 30 Aug 2000. The aim was to provide financial assistance to MSME Ughogo at the least cost and unsecured business loans with no personal guarantee. But its main problem was that it did not get enough credit nor could it get enough time for repayment.
So to solve this problem, the Government of India has decided to provide business loans without any guarantee or startup business loans no collateral. Under which, up to 2 Crore loans will be provided by almost all banks of the country under this CGTMSE scheme.
How to Get Collateral-free Business Loan With this, it will be ensured that if the trader is unable to repay the principal due to any reasonable reason, then the government will give the debtors a cover of 75% for the business loan without collateral. It is the best small business loans for startups.
How much coverage will be available in CGTMSE [CGTMSE Benefits]
Generally, it provides loan coverage ranging from 50% to 80%, which is given according to different circumstances –
- If an MSME has women operations or masters then it gets a special discount i.e. up to 80% coverage.
- In addition, this facility is also provided in the North-Eastern state of India. (Including the state of Sikkim)
In case of default i.e. if the merchant is not able to do a loan repayment due to any reasonable reason, then the claim will be set from 75% to 80% in the CGTMSE scheme for a loan up to 50 lakh, and if the loan amount is 50 lakh to 2 crore. Coverage will be given up to 50% also.
Who will get loan under CGTMSE [CGTMSE Scheme Eligibility]
It mainly includes all the MSME Ughogo presently present, but what makes them worthy is the contribution of these MSMEs to Manufacturing & Service Activity. That is, if any MSME industry which does not provide products and services, they will not be considered eligible, along with this, these trade-in services will not be eligible for this scheme –
- Retail Trade
- Self Help Groups
- Training Institutions
- Educational Institutions
What will be the CGTMSE Fee [CGTMSE Laon Interest Rate]
CGTMSE Yojana charges an annual fee @ 1% of the loan amount –
- 0.75% – For loan amount up to Rs. 5 lakhs and
- 0.85% – For loan amount from 5 lakh to 1 crore
Where to get CGTMSE application form [Download Application Form]
You can get the CGTMSE application form from any bank, apart from this you can also download the form from the link – Download CGTMSE Form (From Official Site)
How to apply for CGTMSE loan – How to Get Startup Business Loan
Talk about how to get Loan & Coverage under CGTMSE Scheme, for this, you have to follow the simple steps given below for the CGTMSE registration to get Collateral-free Business Loan-
4 Steps to Getting a Small Business Loan Without Collateral
Step 1: First Complete Your All Documents
It doesn’t matter if you have a new business or an old one. Because no bank will loan you unless you have proper documents, licenses, and permission. So first make your business organization and prepare the documents. For this, you have to complete these tasks –
- Register the business according to your Business Mode.
- Apart from this, obtain the necessary license and permission from the government.
- Open Current Account and apply for Business PAN Card.
- Take care of other documents like Aadhar Card, Tax Returns, and Income Proof.
Step 2: Prepare the Project Report or Business Plan
Project Report is the most important thing to get a loan under the CGTMSE Scheme because the bank will decide on the basis of whether you will get a loan or not. Keep these things in mind when making a Project Report or Business Plan –
- The project report should be Viable.
- The report should remain full proof based on Market Analysis, Return on Investment, Break-Even Point, and Payback Calculation.
- Along with this, you can give proper data to give more confidence to the bank.
- You can take the help of Experts to make a better report so that there is no shortage in your report.
Step 3: Apply for the Bank Loan
When you have the necessary documents and project report ready, you can apply for a loan at your nearest bank. Also, It would be advisable to know the bank where you have an account and start talking about the loan.
Step 4: Get Coverage under CGTMSE Scheme
When your loan is accepted, the bank will apply to the government for approval of the scheme. After approval of the scheme, you will have to submit all the documents and pay the fees.
Banks associated with CGTMSE scheme [Associate Banks]
1. Scheduled Commercial Banks which can be Public, Private, or Foreign Banks.
2. 133 lending institutions, which have been registered as MLI’s Trust List (May 31, 2015) –
Best banks for small business startup loans
- 73 Regional Rural Banks
- 26 Public Sector Banks
- 21 Private Sector Banks
- 4 Foreign Banks
- Delhi Financial Corporation (DFC)
- Kerala Financial Corporation (KFC)
- Development Finance Corporation Ltd.
- Export-Import Bank of India
- National Small Industries Corporation (NSIC)
- The Tamil Nadu Industrial Investment Corporation Ltd.
- North Eastern Development Finance Corporation (NEDFI)
- Small Industries Development Bank of India (SIDBI)
CGTMSE Scheme Contact Details & Customer Support –
- CGTMSE Customer Support Number – Toll-Free No.: 1800222659/ (022) – 6722 1553
- During Office Hours: 10:30 to 18:30
- Official CGTMSE Website – www.cgtmse.in
- Head Office Credit Guarantee Trust – The Chief Executive Officer, CGTMSE, 6th Floor, SIDBI, Swavalamban Bhavan, C-11, G-Block, BKC, Bandra (East), Mumbai – 400 051, Contact Nos:- (022): 67221553, 67221483
To get more information related to CGTMSE Scheme or to know the answers to some other questions, ask your questions in the Comment Box, we will answer all your questions.
FAQ’s [CGTMSE Yojana]
Q.1 What is the Lock-in Period in CGTMSE Scheme?
Ans: The period of the next 18 months from the date of sanction of loan or implementation of guarantee will be considered as a lock-in period.
Q.2 What is the percentage coverage and margin under the Credit Guarantee Trust Scheme?
Ans: CGTMSE plan has 50% to 80% coverage and 10% Margin.
Q.3 Will any Private and Foreign Bank also be eligible for guarantee cover?
Ans: Yes. These have also been included in the RBI list which is listed in the Second Schedule to the Act, 1934.
Q.4 Does the bank not ask for the remaining 15% security?
Ans: This is an important question because 75% Coverage will be given by the government and there is a 10% margin, then how will the bank bear the remaining 15% loss. So in the CGTMSE scheme, a new rule was introduced by the government, in which if the bank and the person taking the loan both agree, then security can be kept at the remaining 15%.
Q.5 Is the CGTMSE scheme only for a new business?
Ans: Mainly it has been brought for New Business. In which MSME traders can start their business by taking loans easily. Along with this, the presently present MSME industry can also take advantage of this.
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