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What is CGTMSE ??CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES ?
What is CGTMSE – CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES ?
The CGTMSE scheme is operationlized by SIDBI and Govt. of India in the year 2000. The main
Objective is that the lender should give importance to project viability and secure the credit facility
purely on the primary security of the assets financed. This scheme gives an opportunity to
entrepreneurs to avail the credit facility from the Bank even if they are not having any collateral
security or third party guarantee to offer to the banks.
What is Coverage of the scheme ?
New as well existing micro and small enterprises engaged in manufacturing and service sector can avail
the credit facility up to Rs 100 lacs under this scheme.
It is clarified here that to be eligible under the scheme the original investment in plant and machinary
should be up to Rs 5.00 crores for manufacturing sector and original investment in equipment should be
up to Rs2.00crores for service sector.
Under the scheme excluding retail trade , all most all business activities in manufacturing and service
sector are covered including loans to transport operators.
What is Purpose of loan ?
Working capital needs[fund based and non fund based]
Term loan for construction of factory building/office/purchase of machines and equipments.
The scheme is also available for modernization/expansion of existing units, provided existing facility as
well as proposed facilities does not exceeds Rs100lacs.
What is the Nature of facility ?
Cash credit
Term loan
Composite loan [Term loan +working capital for one operating cycle]
letter of credit
Bank guarantee.
What is the Primary security ?
Primary security shall mean the assets created out of the credit facility and existing unencumbered
assets which are directly associated with the project or business for which the credit facility has been
extended.
Collateral security.- Not required.
Third party guarantee.- Not required. However personnel guarantee of proprietor/parteners is not
treated as third party guarantee.
The following is the Guarantee fees.
|
loan amount |
up front guarantee fees |
for north east and Sikkim |
up front guarantee fee. for NE and Sikkim |
|
up to Rs 5lacs |
1% of sanctioned amount |
up to Rs 5lacs |
1% of sanctioned amount |
|
Beyond Rs 5lacs and up to 100 lacs |
1.5% of sanctioned amount |
beyond Rs 5 Lacs and up to 50 lacs |
0.75% of sanctioned amount |
|
beyond Rs50 lacs to 100 lacs |
1.5% of sanctioned amount |
The guarantee fee should be paid within 30 days from the date of first disbursement.
What is the Annual service fees ?
Annual service fee is required to be paid every year before 31 st may to contue the cover under the
above scheme.
The annual service fees is 0.5% of the credit facility up to Rs 5lacs and 0.75% of the credit facility beyond
Rs 5lacs to 100lacs.
Both the guarantee fee as well as annual service fee are recoverd by the bank from the borrower for
payment to CGTMSE trust.
It is to be noted that coverage of loan under above scheme is a facility to the borrower to avail without
collateral security. It gives an additional responsibility on the borrower to make prompt repayment. In
case of default bank is under obligation to initiate the action for recovery of dues as per rule including
legal action to satisfy CGTMSE. If the bank has taken the claim in case of default from CGTMSE, the
same is required to be refunded after recovery from borrower. Hence the facility should be availed with
a good spirit of paying back in time.
Jus4uloan.com facilitate and promote the Enterpreneurs to set up their new ventures by obtaining loan
under CGTMSE scheme and make their dream business plan a reality.
