SMEs Can Now Avail Non-Collateral Loans In India

by ckasundra | Jun 15, 2017
SMEs Can Now Avail Non-Collateral Loans In India

Indian SMEs operate in a very challenging atmosphere. Numbering over 48 million, Indian SMEs have grown at a stable pace of 4.5% in the last 5 years. However, SMEs are having difficulties in raising money, among other challenges. The reality is that although this sector plays a vital role in giving a boost to the overall GDP, it is still overlooked by the Government.

According to the World Bank, India has slipped 3 ranks in its #EaseofDoingBusiness Index* – this raises deep concerns about the state of affairs in India. The respondents interviewed were key decision makers of SMEs, such as Owners and Managing Directors, CxOs, Business Heads, Import/Export Managers, Production Heads, among others.

In order for SMEs to compete with large scale enterprises and other global counterparts, it is important that they are provided easy and affordable opportunities to obtain credit. As raising funds remains the core problem for all SMEs, schemes that will provide collateral free credit at reasonable interest rates remain top of every business owner’s expectation list.

Govt. of India launched the Credit Guarantee Fund Scheme for Small Industries on 1st August, 2000 with a view to alleviate the problem of collateral security and impediment to flow of credit to Micro and Small Scale Industries (SSI) sector. Under the CGTMSE Scheme (www.cgtmse.in) the trust extends guarantee up to Rs.100.00 lacs per borrower for credit facilities sanctioned without collateral or third party guarantee. The loans sanctioned under Govt. sponsored schemes are also covered under the scheme.

The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSME unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80 / 85 per cent of the credit facility.

Please see the following link to acquaint yourself:
http://smallb.in/bankschemes?field_bank_scheme2_tid_2=234&field_financial_institution2_tid=

Click here to see which bank can offer appropriate funding schemes for your SMEs: a href=”http://smallb.in/bank-schemesbility_criteria.aspx

Click here for eligibility criteria (CGTMSE):
http://www.cgtmse.in/Eligibility_criteria.aspx

No collateral security is required for advances to micro and small sector up to Rs.10 lakhs. The bank may on the basis of good track record and financial position of the SME units, increase the limit of dispensation of collateral requirement / third party guarantee for loans up to Rs.100 lakhs subject to the same being covered under Credit Guarantee Fund Trust for Micro and Small enterprises (CGTMSE).

Thus far, with our #UCANPeriGrow program featuring a team of highly experienced financial consultants spread across the Indian subcontinent, SMEs can not only get ready for pre-qualification for a non-collateral loan but also get themselves ready for expansion in the real sense.

Contact us at aspire@perigrow.com or +91 22 6117 4910.