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June 14, 2026
The Dispatch

Definition

Credit Guarantee Fund (CGTMSE)

CGTMSE is the credit guarantee scheme that lets banks lend to micro and small enterprises without collateral by guaranteeing a portion of the loan.

Many small businesses fail to get loans because they lack collateral. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) addresses this by guaranteeing a share of eligible collateral-free loans, so lenders can extend credit with reduced risk of loss.

Backed by the government and SIDBI, the scheme covers loans up to a ceiling and charges a guarantee fee. It is a key enabler of MSME credit alongside PM Mudra Yojana and Stand-Up India, helping bring informal small enterprises into the formal lending fold.

Related terms

  • SIDBISIDBI is the Small Industries Development Bank of India, the principal financial institution for promoting and financing the MSME sector.
  • Pradhan Mantri Mudra YojanaPM Mudra Yojana provides collateral-free loans to small and micro non-corporate businesses through banks and other lenders to support self-employment.
  • Stand-Up India SchemeStand-Up India facilitates bank loans to Scheduled Caste, Scheduled Tribe and women entrepreneurs to set up greenfield enterprises.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.