How can you get a loan under CGTMSE Scheme?

How can you get a loan under CGTMSE Scheme?

Two years back I posted a blog “CGTMSE – Collateral Free Loan Scheme”. It still attracts comment. The fact is many don’t get it. In fact of all those who commented two seemed to have got or getting CGTMSE Loan and they shared the information here. My special thanks to Nitin Shukla and Sowman Lala. They are the inspiration for this blog post.


      CGTMSE Scheme is predominantly for Manufacturing or for Trading. Service and IT are covered but they have limitations.
      Make no mistake. CGTMSE is a collateral free scheme. Not a security free scheme. It is still a secured loan.
      Security should be in the form of Business Assets. Minimum requirement of Net Assets (Assets-Liabilities) is 1.33 times the loan amount.
      That is why Startups and Service Companies find it difficult to raise loans under CGTMSE Scheme. If you want to finance burn loss or for virtual product development does not get financed under CGTMSE Scheme. You cannot provide security in the form of Business Assets.
      A mature service or an IT company can get the desired loan if they have built sufficient profits.
      Conduct of the account should be impeccable. No bouncing cheques, no over draft request to banker etc
      Yours should be a growing company, in terms of profits and turnover.
      Stop cheating on tax and make good compliance a habit. This helps in getting funds and growing business. I know several companies that are Private Equity ready, business maturity wise. They can’t grow because of their pathetic compliance levels. Selling without bills and overstating expenses bring more harm in reality. Entrepreneurs should recogonise this, if they want to grow and if they don’t have money.
      If you are a startup you can still get money under CGTMSE Scheme if your contribution to the project is over 50% and you are investing in real assets.
    I am assuming your name has not figured in CIBIL database as a defaulter. If it has, your chances are bleak.

If you think you conform to the above and still you haven’t got the loan (quite possible. This depends on Manager’s risk appetite) you have redressal mechanism in place. Contact the person in charge of SME. You can lodge a complaint here Or you have RTI. Keep it as the last resort. You have to work with the bank, anyway. Good Luck.

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