Unsecured Loan with CGTSME
For Term Loan, Cash Credit is covered under CGTMSE coverage for all types of business including Manufacturing, Service and Trading under the positive list. Manufacturing businesses need more funds at initiation whereas trading businesses need funds after one level of growth to make more turnover or rotation of Funds. Where the Promoter lacks sufficient secondary collateral for loans, Where CGTMSE Scheme helps to complete financing requirements by Guarantee for Banker. The CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) is a government program that helps businesses get loans without collateral. The CGTMSE will guarantee up to 5 crores of the loan amount, which means that the lender will get their money back even if the business can’t repay the loan. However, there is a fee for this service, which can range from 0.6% to 1.8% of the loan amount.
Gujarat Government is providing reimbursement CGTMSE Charges to manufacturing businesses, to help them offset the cost of CGTMSE loans. Ultimate business may not have to bear CGTMSE fees Cost for Five years at all.
Overall, CGTMSE loans can be a good option for manufacturing businesses that need financing but don’t have collateral. By taking advantage of state government subsidies, businesses can further reduce the cost of these loans and make them even more attractive.
Nowadays, If MSMEs properly comply, Then enterprises are eligible for Cash Credit based on GST Turnover possible up to 20% of Turnover with or without CGTMSE. And Especially some banks are aggressive for the same.