The Indian economy is considered one of the strongest in the world. She contributes more than 4% of the world GDP alone. The ever-growing Indian economy has been largely supported by the presence of micro, small and medium enterprises. Since the last 20 years, these enterprises have been contributing heavily in the fields of manufacturing, exports, wholesale, distribution, transport, and many more. A recent survey reflects that over 20 million MSMEs throughout the country have employed more than 60 million people. And the number is on a constant rise.
To aid the growth of such enterprises and, in turn, the growth of the nation, the Indian government came up with the Credit Guarantee Fund Trust for Micro and Small Enterprises back in 2000. The Trust was primarily aimed at eradicating financial obligations that small entities faced. CGTMSE also aimed at facilitating budding entrepreneurs set up their businesses.
How CGTMSE works?
Financing can support a business’ working capital requirements and help it flourish. In India, financial lenders are in plenty. However, most of them refrain from sanctioning loans to upcoming or micro and small entities. Considering this scenario, the government formed the CGTMSE. It encourages financial institutions to lend collateral-free business loans to developing and new enterprises.
The Trust provides a guarantee cover of up to 75% (80% in some instances) of the loan amount sanctioned under this scheme. This way, the scheme encouraged lenders to approve MSME loans which helped micro, small and medium organisations run their businesses without facing financial crises.
To avail loans under CGTMSE, business entities must apply only with lenders eligible to give away such loans. A business plan must accompany the loan application. It should also include the nature of that business, business plan, turnover projection, etc. When the loan is sanctioned, the lender will apply for a CGTMSE cover. After obtaining the cover, the loan gets secured under the MSME Act, 2006.
However, there are other alternatives for MSMEs in the market. Financial institutions like Bajaj Finserv sanction collateral-free business loans to micro, small and medium enterprises. Such loans come with affordable rates of interests, flexible repayment tenures and high loan-to-value of up to Rs. 30 Lakh. Bajaj Finserv Business Loans are further made easy-to-avail with their exciting pre-approved offers.
The pre-approved offers are available on business loans, personal loans, mortgage loans, and many other financial products and services. These offers make the process of availing finances easy and less time-consuming. To check your pre-approved offer, provide only a few of your personal details.
How to utilise business loans?
Business loans can be used to boost the working capital requirements. Additionally, such credits can help in:
- Buying new machinery
- Setting up a new branch
- Debt consolidation
- Payroll settlement
- Office renovation and others.
Know the business loan eligibility
An Indian citizen who has been in business for at least 3 years is eligible to avail an unsecured business loan. Other eligibility criteria are:
- Age must be within 25-55 years.
- Income Tax returns filed for at least last 1 year.
- Audited company turnover for the last year.
Provide these necessary documents and avail such advances as CGTMSE loans require more documents and take more time to be sanctioned.
With strong financial support for start-ups and MSMEs, the economy of India is bound to grow leaps and bounds in the upcoming years. Such financial measures will inspire young entrepreneurs to lead the country in the fields of technology and innovation. Be it a financial crisis or the need to expand your business; an unsecured business loan is always there to meet your necessities. Avail the credit easily, utilise without restrictions, repay responsibly and participate in making India a stronger nation economically.