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Business Loan Without a Collateral in India

A major demand for the establishment of a brand new business is capital within the sort of equity or debt. within the case of initial generation entrepreneurs, each equity, and debt is exhausting to come by and could be a major hurdle for several initial time / initial generation entrepreneurs. Therefore, in an attempt to push initial generation entrepreneurs and their dreams of putting in place a business, the govt of India through the Credit Guarantee Fund Trust for micro and small Enterprises (CGTMSE) provides access for initial generation entrepreneurs to bank credit while not the hassles of collaterals / third party guarantees up to 1 crore.

Objectives Of Credit Guarantee Fund Trust for micro and small Enterprises (CGTMSE)

The main objective is that the investor ought to offer importance to project viability and secure the credit facility strictly on the first security of the assets supported. the opposite objective is that the investor availing guarantee facility ought to endeavor to present composite credit to the borrowers so the borrowers get each term loan and working capital facilities from one agency.  The Credit Guarantee scheme (CGS) seeks to reassure the investor that, within the event of an MSE unit, that availed loan without collateral facilities, fails to discharge its liabilities to the loaner, the Guarantee Trust would keep the loss incurred by the investor up to 75 / 80/ 85 per cent of the credit facility.

Read: Bank Loan for Startup Business in India

Credit Guarantee (CGTMSE)

Any collateral / third party guarantee free credit facility (both fund similarly as not fund based) extended by eligible establishments, to new similarly as existing micro and small Enterprise, as well as Service Enterprises, with the most credit cap of Rs.1 crore square measure eligible to be coated.
The guarantee cover obtainable beneath the scheme is to the extent of 75th / 80th of the sanctioned quantity of the credit facility, with the most guarantee cap of Rs.62.50 lakh / Rs. 65 lakh. The extent of guarantee cowl is 85th for micro enterprises for credit up to Rs.5 lakh.

 The extent of guarantee cowl is 80%(i) micro and small Enterprises operated and/or owned by women, and (ii) all credits/loans within the North East Region (NER). just in case of default, Trust settles the claim up to 75th (or 80%) of the number in default of the credit facility extended by the financial organization.

 The investor ought to cover the eligible credit facilities as presently as they're sanctioned.  In any case, the loaner ought to apply for guarantee cowl in respect of eligible credits sanctioned in one calendar quarter latest by the finish of subsequent calendar quarter.  Guarantee can start from the date of payment of guarantee fee and shall run through the in agreement tenure of the term credit just in case of term loans/composite loans and for a amount of five years wherever capital facilities alone square measure extended to borrowers, or for such amount as is also such by the Guarantee Trust during this behalf.

Read: Types of Loans

Scheme: Borrower Eligibility

This Scheme (CGTMSE) is for new and existing micro and small/medium enterprises for the manufacturing sector, services sector and retail traders. under MSMED act,2006. the manufacturing unit does not exceed 10 crores of investment in plant or machinery. whereas service sector does not exceed 5 crores investment to types of equipment are eligible for the loan without a collateral scheme.

Guarantee fees and rate of interests for Loan Without Collateral

Guarantee fees payable 1% for credit facility approved by the borrower. similarly annual fee and service tax also applicable. the banks are following as per RBI norms for the rate of interest on the loan. the rate of interest applicable same of other loans offered by them. 

Documents to be Submitted For Loan

  • Identity proof
  • Address proof
  • Copy of MSME registration certificate
  • Project report
  • Estimation of the machinery or Asset to be buy 
  • Registration certificate such as pollution control board certificate, factories act, etc 
  • Rental agreement or lease deed.
The borrower should open a current account in the name of the firm with proper customer KYC and address proof.

CGTMSE Members Leading Bankers

  • Allahabad Bank
  • Andhra Bank
  • Axis Bank Ltd.
  • Bank of India
  • Bank of Maharashtra
  • Canara Bank
  • Central Bank of India
  • City Union Bank
  • Corporation Bank
  • Dena Bank
  • Deutsche Bank
  • Export Import Bank of India
  • HDFC Bank Ltd.
  • ICICI Bank Ltd.
  • IDBI Bank Ltd.
  • Indian Bank
  • Indian Overseas Bank
  • IndusInd Bank Ltd.
  • ING Vysya Bank Ltd.
  • Kotak Mahindra Bank Ltd.
  • Lakshmi Vilas Bank
  • Oriental Bank of Commerce
  • Punjab & Sind Bank
  • Punjab national bank
  • Small Industries Development Bank of India
  • Standard chartered Bank
  • State Bank of Bikaner & Jaipur
  • State Bank of Hyderabad
  • State Bank of India
  • The State of Mysore
  • State Bank of Patiala
  • State Bank of Travancore
  • Syndicate Bank
  • TamilNadu Mercantile Bank Ltd.
  • The Federal Bank Ltd.
  • The Karur Vysya Bank Ltd.
  • The South Indian Bank Ltd.
  • The Tamil Nadu Industrial Investment Corporation Ltd.
  • UCO Bank
  • Union Bank of India
  • United Bank of India
  • Vijaya Bank
  • Yes Bank
Letus start your dream project with business loan without a collateral

Read: Snapdeal Offers Rs 1,000 Crore Collateral-free Loans for Snapdeal Sellers


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