Credit Guarantee Scheme for Micro and Small Enterprises, CGS-I

Purpose:

CGS-I encourages banks and other approved lenders to provide credit to eligible micro and small enterprises without insisting on collateral security or third-party guarantees. After sanctioning an eligible facility, the Member Lending Institution registers the facility with CGTMSE and pays the applicable guarantee fee. If the account subsequently defaults and the prescribed recovery and claim conditions are satisfied, CGTMSE compensates the lender for the eligible guaranteed portion. CGTMSE does not finance the business directly and is not a subsidy or loan-waiver scheme.

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Key documents:

The exact list is determined by the lender. Common documents include: prescribed loan application; Aadhaar and PAN of promoters; photographs; address proof; constitution documents such as proprietorship declaration, partnership deed, LLP agreement, trust deed or company incorporation documents; Udyam Registration Number; GST registration and returns, where applicable; business licenses and statutory approvals; project report; machinery/equipment quotations; projected financial statements and cash flows; bank statements; income-tax returns; audited or provisional financial statements for an existing enterprise; details of existing loans; promoter contribution evidence; and category, ZED or location certificates where enhanced guarantee cover is claimed. Udyam Registration is mandatory for submitting a new CGTMSE guarantee application.
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Relevant Government Reference / Government Resolution / Orders / Circulars

The scheme is formally titled the Credit Guarantee Fund Scheme for Micro and Small Enterprises, CGS-I. It came into force on 1 August 2000 and initially covered eligible credit facilities extended from 1 June 2000. Following enactment of the MSMED Act, 2006, the Trust and scheme were renamed to reflect coverage of micro and small enterprises. The CGS-I Scheme Document is updated periodically through CGTMSE circulars. From 1 April 2025, the maximum eligible credit facility under the main scheme was increased to ₹10 crore per borrower, and a revised Annual Guarantee Fee structure was introduced.
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Online Facility Available

Available across India through CGTMSE-registered Manufacturing Link Incentives. With effect from 1 April 2025, CGS-I facilitates guarantee support for eligible credit facilities up to ₹10 crore. Availability does not mean automatic sanction. The lender must find the business proposal viable, approve the credit facility and register the eligible facility under CGTMSE. CGTMSE reported 276 registered MLIs across CGS-I and CGS-II as of 7 July 2026.
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Applicable Fee

CGTMSE charges an Annual Guarantee Fee, AGF, on the guaranteed amount for the first year and on the outstanding covered amount for subsequent years.
For guarantees approved or renewed from 1 April 2025, the standard annual
rates are: 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%; and above ₹8 crore to ₹10 crore, 1.20%. Risk-based discounts or premiums may apply at MLI level. A 10% fee concession applies to specified social categories, specified geographic categories and ZED-certified MSEs.

Mode of Fee Payment

The Member Lending Institution pays the guaranteed fee to CGTMSE. CGTMSE permits the lender either to absorb the fee or pass the cost on to the borrower. If passed on, the borrower pays it through the lending bank or institution as part of the sanctioned facility’s charges. The borrower should pay only through the lender’s authorized channel and obtain an official receipt or account entry. The borrower should not make a direct payment to any private agent claiming to arrange CGTMSE cover.
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Decision-Making Authority:

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). CGTMSE was jointly established by the Ministry of MSME, Government of India, and the Small Industries Development Bank of India (SIDBI) in 2000; Ministry of Micro, Small and Medium Enterprises, Government of India.

Time Required for Decision:

CGTMSE does not prescribe one universal loan-sanction period because the credit decision is made by the Member Lending Institution. Processing time depends on the requested amount, documents, project viability, credit history, promoter contribution, statutory approvals and lender due diligence. After sanction and satisfaction of conditions, the lender applies for guaranteed cover. The guarantee becomes effective according to the scheme conditions, including receipt of the applicable guarantee fee by CGTMSE. Applicants should obtain the lender’s loan-application reference number and ask whether and when the facility has been registered for CGTMSE cover.

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Beneficiary:

As mentioned above

Benefits:

Eligible MSEs can obtain collateral-free credit facilities of up to ₹10 crore per borrower through one or more registered MLIs, subject to appraisal and scheme conditions. Eligible facilities may include term loans and fund-based or non-fund-based working-capital facilities. Standard guarantee cover is generally 75%. Micro-enterprise facilities up to ₹5 lakh may receive 85% cover. Women-led enterprises receive up to 90% cover. SC/ST entrepreneurs, persons with disabilities, ZED-certified MSEs, enterprises in aspirational districts and MSEs promoted by Agniveers may receive 85% cover. An additional 5% cover can apply in RBI-identified Credit Deficient Districts, subject to the overall applicable limit cgtmse.in .