New Credit Guarantee Scheme: Central government announced new credit system for MSMEs before launching the financial budget of 2025-26. Eligible manufacturing units which are registered with MSME will get opportunity to apply for a maximum 100 crore rupees loan under the mutual credit guarantee system- MCGS-MSME. National Credit Guarantee Trustee Company Limited (NCGTC) will also support MSMEs by guaranteeing 60% Guarantee coverage.
So if you are also running micro, small or medium enterprises and want to scale up your business with financial assistance then you can check the article where we will share with you details of the newly launched program MCGS-MSME 100 crore loan in 2025 including the eligibility criteria, application procedure, benefits of the program etc.
100 crore loan program for MSMEs
The Government of India announced the mutual credit guarantee system in the financial budget of 2024, but the program has finally started on 29 January 2025, before launching the budget of the session 2025. Under the program, manufacturing units in India will get Hundred crore rupees loan from banks and landing partners with Government of India. Entrepreneurs can purchase machinery and equipments for their business under the program which will help them to increase the production of the product accordingly.
60% guarantee coverage by the government
The program is very beneficial for manufacturing unit as it provides 60% guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to all the Banks and landing partners which are offering the loan amount to the MSMEs in this MCGS program. As most of the banks are demanding Collateral to offer a loan amount, But now they are eligible to apply for a maximum 100 crore rupees loan amount to increase the business without any guarantee.
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10 year repayment facility for upto 50 cr
While the program is offering to borrow a loan of up to 100 crore rupees, but individuals can apply for loan according to their need . If they apply for the loan amount of 50 crore Rupees then will able to create EMI for next 8 years to repay the complete loan. However they will also get 2 years additional Moratorium on principal amounts. Apart from this if you increase the loan amount then Bank can increase the EMI tenure accordingly.
Benefits of New Credit Guarantee Scheme
However the program is launched late but have many benefits which are directly providing facilities to the manufacturing units registered with MSME program of Central Government of India including following benefits:
- The program is open to all the MSMEs registered with udyam portal of Central Government and working as manufacturing units.
- Beneficiaries can apply for the loan of maximum 100 crore rupees to install new machinery or equipment to upgrade the production level.
- Applicants are required to deposit 5% of the loan amount to the bank as Initial contribution and rest of the amount can be used to purchase equipments and other important items for the business.
- It will provide loan without any Collateral where government will provide 60% guarantee to the loan company and rest of the guarantee should be available by the applicant themselves.
Interest rates of MSME 100 crore loan
The interest rates for the newly launched created guarantee scheme for MSME in India will be decided by the bank where they are applying for the loan. However at the initial stage, the bank will not ask any Annual guarantee fees in the first year of the loan application. After that they will be charged 1.5% of the loan amount annually for next 3 years. After completing this time period bank will start to collect 1% annual guarantee fees until the loan tenure completes.
The annual year of the collecting the guarantee fees will be calculated from 31st March of each year. So while apply for the loan amount you are required to check the annual cap and other charges which will be asked by the bank after starting the loan EMI.
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Impacts of credit guarantee scheme for MSME
The credit guarantee scheme for MSME will impact the GDP of the country. According to the reports, the share of manufacturing units in Indian GDP is 17%. Government is aiming to increase the sharing of manufacturing units from 17% to 25% by implementing the credit guarantee scheme. More than 27 million people are working in manufacturing units in India and are part of the MSME program.
It is important to provide facilities to Indian manufacture to boost up their business by financial assistance where they are also getting other type of loans under the program including MUDRA loan program for maximum 20 lakh loan and now they are eligible to get maximum 100 crore rupees loan. However the new budget of the central government is releasing on 1st February 2025 which will further explain the program accordingly.