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What is CGTMSE? Has anyone applied for it?

Hi Rodinhoods,

We are planning to raise funds for our startup UserExperior technologies. When doing so, someone told us about CGTMSE scheme by the Govt of India. When I checked on the website it was very confusing to understand on how it works. Hence i thought to check with you all to see if any one has applied for this scheme and would like to know the following

1. Is this scheme better than applying for angel funding?

2. What are the benefits of this scheme for startups?

3. What is the interest rate do they apply?

4. They mentioned on website that the scheme is collateral free and no guarantee is required, so incase where a default happens how does the institution recover their money?

5. If the scheme is really good, then can you recommend someone who can help in understanding in more detail and also help in the entire application process.

Please also share any more thoughts about this scheme which the above questions do not cover. It will be really helpful.

Thank you

Vimlesh Gautam

@userexperior1

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  1. Hi Vimlesh,

    You can apply for loans in banks through the CGTMSE scheme. The rate of interest will be slightly higher than the usual market rate for loans charged by the bank. To cover the risk of default, a small part is charged by the trust as fees to your lender which will usually be passed on to you, the borrower. 

    You can check with your banker regarding the application process for the loan under CGTMSE – it is pretty similar to any other loan application. The discretion to grant the loan is with the bank, so if they evaluate your business positively, you are likely to get the loan. However, banks are usually reluctant to lend under this scheme and will try their best to give out only a collateral backed loan. 

    Good luck!

    Cheers

    Ravi

  2. Hi ,

    As mentioned by Raviji , its Central Government guarantee scheme upto Rs.one crore loan. The interest is normal SME Loan interest of 11 – 12% and Bank will levy 1.5% as  CGTMSE Fees. . We have availed the loan under this scheme for our Startup ”CremeFresh Ice creams ” . This is one of the best schemes for startups, but few people aware of this. . You can try with this if your requirement is less than Rs.one crore.

    Best of Luck

    Kiran 

    CremeFresh , Mangaluru.

  3. HI Vimlesh

         As Ravi Kumar has said you can apply for this loan only to the banks listed by CGTMSE there are few conditions to this you cannot have any pre existing loan. Also you need to be registered under MSME act that adds benefit to your case. The loan is generally not preferred by any banks they will push you into getting collateral.

          The loan is mostly for machinery equipments if you have any service offerings proving to bank becomes all the more difficult as why you need funds. The interest rates are slightly higher as Ravi explains it and also shown on their site but always better than blocking your collateral. Surprisingly you might find even agents helping you out in this. Best of luck….

    Regards @ anuj

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