CGTMSE lets a bank lend a small business up to ₹10 crore without property as security. Example: on a ₹1 crore loan with 75% cover, the cover is ₹75 lakh and the first-year fee at 0.60% is ₹45,000. JR Loan Advisors in Chennai explains it below.
How does it work?
- You apply to a bank for a term loan or working capital.
- The bank checks your business like any other loan (see how a bank decides your loan).
- If it says yes, it covers the loan with CGTMSE instead of asking for property.
- If the business later cannot pay, the trust pays the bank part of the loss. You still owe the loan.
Key numbers (from the official scheme papers)
- Limit: up to ₹10 crore per borrower from banks, for guarantees approved from 1 April 2025.
- Cover: 75% of the amount in default for loans above ₹50 lakh; higher for some groups, such as women-led firms.
- Yearly fee (standard rate): 0.37% up to ₹10 lakh, 0.55% up to ₹50 lakh, 0.60% up to ₹1 crore, 0.85% up to ₹2 crore, 1.00% up to ₹5 crore, 1.10% up to ₹8 crore, 1.20% up to ₹10 crore. Charged on the cover in year 1 and on the amount still owed after that.
Worked fee example
Loan ₹1 crore. Cover 75% = ₹75 lakh. Year 1 fee at 0.60% = ₹75,00,000 × 0.006 = ₹45,000. In later years the fee is worked out on the amount still owed, so it falls as you repay.
Official sources
Checked 1 Nov 2026. Want to know if your business fits? WhatsApp +91 94450 93336.
Written and reviewed by CA Jitendraa Rathi, Chartered Accountant (CA membership number 217936) · Ex-banker, 20 years of experience in credit and lending · LinkedInLast reviewed · Expert review: CA Jitendraa Rathi (ICAI 217936)