Government approves ₹100 cr loan guarantee scheme for MSMEs

The government has launched the Mutual Credit Guarantee Scheme for micro, small, and medium enterprises (MSMEs), offering loan guarantees up to ₹100 crore. Aimed at boosting manufacturing and MSME growth, the scheme will provide collateral-free loans with flexible repayment terms to support capacity expansion.

The government has approved the Mutual Credit Guarantee Scheme for micro, small, and medium enterprises (MCGS-MSMEs), which guarantees loans up to ₹100 crore. Announced in the 2024-25 Union Budget, the scheme aims to facilitate access to credit for MSMEs, specifically for purchasing plant, equipment, and machinery, thereby boosting manufacturing growth.

The scheme will enable MSMEs to secure collateral-free loans from banks and financial institutions, supporting their expansion and capacity-building efforts. This is expected to help accelerate manufacturing by increasing production capacity. Under the scheme, the National Credit Guarantee Trustee Company Limited (NCGTC) will provide a 60% guarantee on loans granted to eligible M9iuhSMEs.

Loans of up to ₹50 crore will have a repayment period of up to eight years, with a two-year moratorium on principal repayments. For loans above ₹50 crore, the repayment schedule and moratorium period can be customized based on the borrower’s needs.

This initiative is part of the government’s broader efforts to support MSMEs, which are crucial for economic growth and job creation in India. By improving access to capital, the scheme aims to help MSMEs overcome financial hurdles and promote their long-term growth and sustainability.