CGTMSE in 2026: How to Get a Collateral-Free MSME Loan up to ₹10 Crore

CGTMSE (the Credit Guarantee Fund Trust for Micro and Small Enterprises) guarantees bank loans to micro and small enterprises so the lender does not ask for collateral or a third-party guarantee. It covers loans of up to ₹10 crore per borrower from scheduled commercial banks (less from small finance, regional rural and co-operative banks and micro-finance institutions), and the lender pays an annual guarantee fee starting at 0.37%. There is no separate application: you ask your bank to cover the loan under CGTMSE when it sanctions it.

Sources checked: 20 October 2026

Facts checked on 20 October 2026 against the CGTMSE CGS-I scheme document (updated 1 April 2026), CGTMSE Circular No. 250/2024-25 and the CGTMSE fee page.

Key facts

Item	CGTMSE (CGS-I), October 2026
What it does	Guarantees collateral-free loans to micro and small enterprises
Maximum cover per borrower	₹10 crore (scheduled commercial banks, select FIs); ₹2 crore (small finance, regional rural and co-operative banks); ₹50 lakh (micro-finance institutions)
Share of the loss guaranteed	75% to 90%, by borrower category and loan size
Annual guarantee fee	0.37% (loans up to ₹10 lakh) to 1.20% (₹8–10 crore); 10% concession for women-owned units, North East and aspirational districts
Fee base	Guaranteed amount in year one; outstanding amount after that
Eligible borrowers	New and existing micro and small enterprises, including service units and retail and wholesale trade
Who applies	The lender, on the CGTMSE portal

What is CGTMSE?

CGTMSE is a guarantee fund set up by the Ministry of MSME and SIDBI; it does not lend. It guarantees loans that its member lending institutions — scheduled banks, and eligible small finance banks, regional rural banks, co-operative banks, NBFCs and micro-finance institutions — make to micro and small enterprises without collateral security or a third-party guarantee. If the loan fails, the Trust pays the lender the guaranteed share of the loss, which is what lets the bank say yes without a mortgage.

Under the hybrid security option, a lender that takes collateral for part of a loan can have the unsecured part covered by CGTMSE.

How much does CGTMSE cost?

The annual guarantee fee runs from 0.37% a year for loans up to ₹10 lakh to 1.20% for loans between ₹8 crore and ₹10 crore, charged on the guaranteed amount in the first year and on the outstanding amount after that. Women-owned units and units in the North East and aspirational districts get a 10% concession. The lender pays the fee to CGTMSE and may pass it on to you.

State policies can bring the cost down. Punjab's Industrial and Business Development Policy 2026 repays 100% of the fee to micro and small enterprises, up to ₹3 lakh a year for seven years. Haryana's 2026 policy announces a State sectoral credit guarantee fund, but that fund is announced, not operational: no unit can claim it yet.

Who is eligible for CGTMSE?

• New and existing micro and small enterprises (not medium), in manufacturing, services and retail or wholesale trade.
• Borrowing a term loan or working capital from a member lending institution.
• The facility, or the part to be guaranteed, must be free of collateral and third-party guarantees.

How do I ask my bank for CGTMSE cover?

Tell the bank at the appraisal stage that you want the loan covered under CGTMSE instead of offering property; the rest runs through the bank:

1. Ask before the sanction. Banks decide on cover when they appraise the loan, not afterwards.
2. Give the bank a bankable project. Without collateral, the bank leans on cash flow: a proper project report with realistic projections matters more than usual. The DPR Builder sets one up in bank format, and how to write a strong DPR explains what bankers look for.
3. The bank registers the guarantee on the CGTMSE portal after sanction and pays the fee.
4. Keep the account regular. If the loan turns bad, the bank claims from the Trust, but the bank still pursues recovery from you. The guarantee protects the bank, not the borrower.

Common misunderstandings

• "CGTMSE means the loan is interest-free." No — it changes the security, not the rate.
• "I need to apply to CGTMSE." No — the lender does.
• "Medium enterprises qualify." No — micro and small only.

For smaller loans see PMEGP vs CGTMSE vs MUDRA. Check which schemes match your unit, or ask our expert team about structuring a collateral-free loan through our project finance service.