Use this free CGTMSE calculator to estimate your loan guarantee coverage percentage and Annual Guarantee Fee (AGF) under the 2026 CGTMSE guidelines. Whether you're applying for your first business loan or scaling up an established MSME, this gives you a working estimate of your collateral-free coverage before you sit down with your bank.
Official 2026 CGTMSE Guidelines All Business Categories Supported Coverage & Fee Calculator Zero Registration Required
What Is CGTMSE?
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government-backed credit guarantee scheme set up jointly by the Ministry of MSME and SIDBI in August 2000. It exists to take some of the risk off banks and NBFCs when they lend to micro and small enterprises without collateral.
Most small business owners run into the same wall: banks want personal guarantees or property before they'll sanction a loan, and not everyone has assets to pledge. CGTMSE steps in as a government guarantor on the borrower's behalf. When a bank approves an MSME loan under this scheme, CGTMSE covers a set percentage of the loan, known as the guarantee amount. If the borrower defaults, CGTMSE pays the bank that guaranteed portion.
Under the
latest guidelines (effective April 1, 2025), the coverage ceiling has been raised to ₹10 crore per eligible borrower, which makes the scheme worth a look even for larger, growing businesses. It's already helped a huge number of retail shops, manufacturing units, and service enterprises get bank funding without putting personal assets on the line. If you haven't confirmed your
MSME classification yet, it's worth doing that first, since your category directly affects the coverage percentage below.
CGTMSE Coverage Percentage Explained
Coverage percentage is the portion of your loan that CGTMSE guarantees to the bank. Say your MSME loan is ₹25 lakh with 80% coverage: the guarantee amount is ₹20 lakh. If you default, CGTMSE pays the bank up to that ₹20 lakh, and the remaining ₹5 lakh stays on the bank's books as its own risk.
Two things decide your coverage percentage: loan size and business category. Women entrepreneurs, SC/ST owners, ZED-certified units, and micro enterprises all get better coverage than a general business, as part of CGTMSE's push for more inclusive MSME lending. There's also a lesser-known bump: MSEs in
RBI-identified Credit Deficient Districts (ICDD) get an extra 5% on top of the standard rate, effective December 15, 2023. This one gets missed often, so check your district before assuming the standard slab applies to you.
Example Scenario
Say you run a micro enterprise and need a ₹25 lakh loan for new equipment. Under the 2026 guidelines, a micro enterprise borrowing between ₹5 lakh and ₹50 lakh gets 80% coverage. CGTMSE guarantees ₹20 lakh of your ₹25 lakh loan. The remaining ₹5 lakh isn't extra liability for you, it's simply the uncovered slice that stays with the bank.
CGTMSE Coverage Percentage by Loan Size and Business Category (2026)
Source: Official CGTMSE Scheme Document (CGS-I), updated April 2025. ZED-certified units and aspirational district enterprises get the same preferential coverage as micro enterprises. MSEs in RBI-identified Credit Deficient Districts add 5% to the applicable rate above.
CGTMSE Annual Guarantee Fee (AGF) Structure Explained
Coverage isn't free. Borrowers pay an Annual Guarantee Fee (AGF) to the trust, calculated on the guaranteed loan amount in year one, then on your outstanding balance every year after that (per Circular No.139/2017-18, for loans sanctioned or renewed on or after April 1, 2018). It's charged for as long as the loan runs.
Under
Circular No.251/2024-25 (March 18, 2025), the AGF structure was revised downward, especially for guarantees above ₹1 crore. Most banks just deduct the AGF straight from your loan disbursement rather than billing you separately, so don't be surprised if your net credit is a bit less than the sanctioned amount. Women entrepreneurs, SC/ST owners, and ZED-certified units get a 10% discount on whatever the standard AGF rate would be.
AGF Calculation Example
Take a ₹25 lakh MSME loan for a micro enterprise, with 80% CGTMSE coverage (₹20 lakh guaranteed). Loans between ₹10 lakh and ₹50 lakh carry a 0.55% annual AGF, so year one comes to ₹20,00,000 × 0.55% = ₹11,000. From year two, the fee shifts to your outstanding balance, so it shrinks as you pay down the loan.
CGTMSE Annual Guarantee Fee (AGF) Rates by Loan Size (2026)
Source: CGTMSE Circular No.251/2024-25, effective April 1, 2025. Rates exclude GST. AGF is charged on the guaranteed amount in Year 1, and on the outstanding balance from Year 2 onward. Some banks add a risk premium over the standard rate depending on their internal MLI category.
CGTMSE Eligibility: 6 Key Requirements
Before you apply for a CGTMSE-backed loan, check your business against these basics from the official scheme document:
Udyam Registration
Free at
udyam.gov.in, using your PAN and Aadhaar, takes under 10 minutes. It's mandatory: your bank has to enter your Udyam Registration Number (URN) into the CGTMSE portal when it submits the guarantee application, so get this done before you apply for the loan, not after. See the official
Udyam registration portal for the full walkthrough.
Manufacturing, Service, or Trading Business
Under Circular No.210, trading businesses now get the same treatment as manufacturing and services for fee, ceiling, and coverage. Agricultural activity, educational institutions, and SHGs don't qualify.
New or Existing Business
There's no minimum operating history required, so first-time entrepreneurs can apply from day one, right alongside established MSMEs.
Loan Amount Within Limits
Loans must fall between ₹50,000 and ₹10 crore. The ceiling was raised from ₹5 crore to ₹10 crore effective April 1, 2025 for CGS-I (banks and eligible NBFCs). Regional Rural Banks (RRBs) still cap at ₹2 crore.
Loan Through a Member Lending Institution (MLI)
Your loan needs to come through a bank or NBFC registered as an MLI with CGTMSE. Most public sector banks (SBI, PNB, Bank of India, Bank of Baroda), several private banks, and select Small Finance Banks qualify. Worth confirming MLI status before you apply, since not every branch officer volunteers this.
Demonstrated Repayment Capacity
CGTMSE lowers the bank's risk, it doesn't remove the bank's underwriting. You'll still need to show revenue, cash flow, and existing debt obligations that support repayment.
Step-by-Step CGTMSE Loan Process
- Register on the Udyam Portal
Head to
udyam.gov.in with your PAN and Aadhaar ready. It's free and takes roughly 10 minutes, and you'll come out with a Udyam Registration Number (URN) confirming your MSME classification. Your bank can't submit a guarantee application without this number in hand.
- Approach an MLI Bank or Lender
Apply for a collateral-free MSME loan at a Member Lending Institution, whether that's a public sector bank, a private bank, or an NBFC on the CGTMSE panel. Bring your Udyam certificate, loan application, and business plan, and tell the loan officer directly that you want CGTMSE coverage, since it isn't always applied by default.
- Bank Processes CGTMSE Coverage
Once the bank evaluates your application and sanctions the loan, it logs into the CGTMSE portal and files the guarantee application itself. You never deal with CGTMSE directly, that part is entirely between the bank and the trust. Approval typically comes through within 24 hours of the bank's submission.
- Loan Approval, AGF Payment, and Disbursement
Once the guarantee is approved, your loan is disbursed. The bank deducts the Annual Guarantee Fee upfront and remits it to CGTMSE, so what lands in your account is the loan amount minus that first-year AGF. From year two on, the fee is billed annually on your outstanding balance until the loan closes.
Practical Examples: CGTMSE Coverage and Fee Estimation
Scenario 1: Micro Enterprise Loan of ₹5 Lakh
Loan Amount: ₹5 lakh
Business Category: Micro Enterprise
CGTMSE Coverage Percentage: 85% (micro enterprises, up to ₹5L)
Guarantee Amount: ₹4.25 lakh
Applicable AGF Rate: 0.37% (loans up to ₹10L)
Annual Guarantee Fee (Year 1): ₹4,25,000 × 0.37% = ₹1,572.50
Net Disbursement: Roughly ₹4.98 lakh after the first-year AGF is deducted
Scenario 2: Woman Entrepreneur Loan of ₹25 Lakh
Loan Amount: ₹25 lakh
Business Category: Woman Entrepreneur
CGTMSE Coverage Percentage: 85% (women entrepreneurs, ₹5L to ₹50L)
Guarantee Amount: ₹21.25 lakh
Applicable AGF Rate: 0.55%, minus the 10% women's discount = 0.50%
Annual Guarantee Fee (Year 1): ₹21,25,000 × 0.50% = ₹10,625
Net Disbursement: Roughly ₹24.89 lakh after the first-year AGF is deducted
Scenario 3: General Enterprise Loan of ₹75 Lakh
Loan Amount: ₹75 lakh
Business Category: General Enterprise
CGTMSE Coverage Percentage: 75% (general enterprises, ₹50L to ₹1Cr)
Guarantee Amount: ₹56.25 lakh
Applicable AGF Rate: 0.60%
Annual Guarantee Fee (Year 1): ₹56,25,000 × 0.60% = ₹33,750
Net Disbursement: Roughly ₹74.66 lakh after the first-year AGF is deducted
How to Use This CGTMSE Calculator
- Step 1: Enter Your Loan Amount
Type in the MSME loan amount you're planning to request, anywhere from ₹50,000 to ₹10 crore. If you need ₹25 lakh for machinery or working capital, just enter 2500000.
- Step 2: Select Your Business Category
Pick General Business, Micro Enterprise, Woman Entrepreneur, SC/ST Owner, or ZED Certified, whichever fits best. If more than one applies, for example you're a woman running a micro enterprise, go with Woman Entrepreneur; it usually gives you the higher coverage and the fee discount together.
- Step 3: Click Calculate
The calculator runs your inputs against the 2026 CGTMSE guidelines instantly and shows your results.
- Step 4: Review Your Results
You'll see three numbers: the coverage percentage guaranteeing your loan, the guarantee amount in rupees, and the estimated Annual Guarantee Fee. Treat these as planning figures, not a confirmed bank offer.
- Step 5: Understand the Context
These figures follow standard CGTMSE guidelines. Your bank will confirm the actual coverage, AGF rate, and loan terms during the formal application, so use this estimate to walk in with realistic expectations and the right questions.
Who This Calculator Is For
This tool works for pretty much any entrepreneur weighing an MSME loan with CGTMSE cover, but a few groups get the most out of it:
Retail Shops and Traders
Grocery stores, small trading businesses, and shops looking at inventory purchase, renovation, or working capital can estimate coverage here. Trading businesses now get the same treatment as manufacturing and services under the current guidelines.
Manufacturing Units
If you're investing in machinery, raw materials, or facility expansion, this estimates your coverage for an equipment or term loan. Micro manufacturing units with plant and machinery investment up to ₹1 crore qualify as micro enterprises under the MSMED Act.
Service Businesses
Consultants, repair shops, salons, coaching centers, IT service providers, anyone buying equipment, expanding premises, or hiring staff, can run their numbers here. Service enterprises with equipment investment up to ₹50 lakh qualify as micro or small enterprises.
First-Time Entrepreneurs
Starting out with no collateral to offer? CGTMSE is probably your most realistic route into institutional credit, and this calculator gives you a sense of what to expect before you walk into a bank branch.
Existing MSMEs Planning Expansion
Opening a second location, upgrading equipment, scaling production, this helps you estimate coverage and fee costs for an expansion loan so you can build the AGF into your business plan from the start.
Why CGTMSE Matters for MSME Growth
The headline benefit is collateral-free lending. Banks used to insist on property, jewelry, or a third-party guarantee before sanctioning an MSME loan; CGTMSE removes that requirement for eligible borrowers, so approval rests on project viability rather than asset ownership.
It also shifts risk. When 75% to 90% of the principal is protected by CGTMSE, banks are more willing to lend to businesses they might otherwise turn away, and there's often less due diligence around collateral valuation, which can mean faster sanctioning than a comparable non-guaranteed loan.
That backing opens the door to bigger amounts too, up to ₹10 crore, which is a real jump from what most owners could access through an unsecured personal loan. And because coverage only applies to Udyam-registered businesses, it nudges owners toward formal registration, which in turn opens up other government MSME schemes beyond just this one.
Priority categories get extra support on top of all this. Women entrepreneurs get up to 90% coverage (raised from 85% under a circular effective April 2024) plus a 10% AGF discount, and SC/ST owners and ZED-certified units get similar treatment. If you're a woman entrepreneur, it's also worth checking the
She-Mart Scheme for additional support beyond CGTMSE.
Things to Check Before You Apply
A few practical points that trip people up during the application:
Get Udyam Registration First
It's free, online, and takes about 10 minutes with your PAN and Aadhaar. Skip any intermediary charging a fee for this, it's always free on the official government portal, and paying someone for it is a waste of money.
Confirm Your Business Activity Qualifies
Manufacturing, service, and trading businesses are covered; agriculture, educational institutions, and SHGs aren't. Under Circular No.210, trading is now fully aligned with manufacturing and services for coverage, fee, and ceiling purposes.
Coverage Isn't Automatic Approval
CGTMSE guarantees the bank, not you. Banks still run credit checks, viability assessments, and cash flow analysis before sanctioning, so a strong application still matters.
Have Your Documents Ready
Udyam certificate, PAN, Aadhaar, 12 months of bank statements, address proof, business registration documents, and a project plan with financials. Add vendor quotations if you're buying equipment. Having this ready upfront speeds things up considerably.
Funds Must Go Toward Business Use
Equipment, inventory, working capital, expansion, infrastructure, that's what CGTMSE-backed loans are for. Not personal expenses, not debt repayment elsewhere. Banks do check, and misuse can get the guarantee pulled.
Budget for the AGF
It starts as low as 0.37%, but it's still a real cost on top of interest and processing charges, and it's easy to forget when you're comparing loan offers. Remember it shrinks each year as your outstanding balance drops.
Limitations of This Calculator
A few honest caveats before you rely on these numbers:
Estimates, Not a Confirmed Offer
Coverage percentage, guarantee amount, and AGF are all based on standard 2026 guidelines. Your bank and CGTMSE will confirm the actual numbers based on your specific loan profile and MLI risk category.
Banks Have the Final Say
Some MLIs sit in a higher risk premium tier under the revised AGF structure and may charge more than the standard rate shown here, sometimes passing that cost on to you. Confirm the exact rate before accepting an offer.
Risk Premium Tiers Aren't Reflected
Under Circular No.251/2024-25, some MLIs fall under "Standard Rate plus Risk Premium" tiers of 5%, 10%, or 15%. This calculator only shows the standard rate, so your real AGF could run higher.
Guidelines Change Over Time
This reflects the 2026 guidelines as of February 2026. Check the
official CGTMSE website or your bank's MSME loan officer for anything more recent.
Doesn't Cover Your Full Loan Cost
This only estimates the AGF. Your actual borrowing cost also includes interest, processing fees, documentation charges, and insurance. Compare the total cost of credit across lenders, not just the CGTMSE fee.
No Personal Credit Factors
CIBIL score, income, existing loans, and repayment history all affect approval, and none of that is factored in here. This estimates coverage by category and loan size only, it can't predict whether your application gets approved.
Related Tools & Resources
Mudra Loan Eligibility Checker
Check your eligibility for the
Mudra Loan (PMMY), a good fit for micro enterprises needing up to ₹10 lakh without CGTMSE coverage.
MSME Classification Calculator
Confirm your business category with the
MSME Classification Calculator, based on investment and turnover under the revised MSMED Act 2020, before applying for CGTMSE coverage.
She-Mart Scheme Eligibility Checker
Women entrepreneurs can look at additional support with the
She-Mart Scheme Eligibility Checker, a government scheme offering marketing and financial help for women-led businesses.
About This Calculator
This free calculator estimates your CGTMSE coverage percentage and Annual Guarantee Fee based on the 2026 guidelines, and it supports all business categories: general enterprises, micro businesses, women entrepreneurs, SC/ST owners, and ZED-certified units. Figures are sourced from publicly available scheme documents, including the CGS-I Scheme Document (April 2025) and Circular No.251/2024-25. Everything here is for educational estimation only; your lending bank confirms the actual coverage and AGF.
A quick note before you rely on this: this CGTMSE calculator is meant to help you plan, not to replace professional financial advice. The coverage percentage and AGF estimate here depend on your loan structure, your bank's MLI risk category, and its internal policies, so treat the numbers as a starting point rather than a guarantee.
These calculations are built on the 2026 guidelines, drawn from the CGS-I Scheme Document (April 2025) and Circular No.251/2024-25. Coverage and fees can shift with bank-specific risk premiums or future scheme updates, so it's worth double-checking the current figures at cgtmse.in or with your lending bank before you commit to anything.
We can't take responsibility for errors, omissions, or outdated figures in this tool, so please verify everything yourself before applying for a loan. For an accurate coverage computation and loan structure, your best move is still talking to your lending bank or checking the official CGTMSE website. This calculator is a planning aid, not a substitute for that conversation.
What is CGTMSE and how does the credit guarantee scheme work?
CGTMSE, the Credit Guarantee Fund Trust for Micro and Small Enterprises, is jointly run by the Ministry of MSME and SIDBI. It guarantees a portion of collateral-free MSME loans to banks and NBFCs (Member Lending Institutions), and pays out that guaranteed portion if the borrower defaults. As of April 1, 2025, it can guarantee credit facilities up to ₹10 crore per eligible borrower.
What coverage percentage will I get, and how much does it change by category?
It depends on loan size and category. For loans up to ₹5 lakh: women get 90%, micro enterprises and SC/ST owners get 85%, general businesses get 80%. Between ₹5 lakh and ₹50 lakh: women get 85%, micro/SC-ST get 80%, general businesses get 75%. Above ₹50 lakh up to ₹10 crore, every category lands at 75%. ZED-certified MSMEs get the same rate as micro enterprises. Women entrepreneurs specifically saw their top-tier coverage raised from 85% to 90% under a circular effective April 2024, and both women and SC/ST owners also get a 10% discount on the AGF. Use the calculator above for your exact figure.
How is the Annual Guarantee Fee (AGF) calculated?
In year one, AGF is calculated on the guaranteed amount (loan amount × coverage %). From year two, it's calculated on your outstanding balance instead. Rates range from 0.37% for loans up to ₹10 lakh to 1.50% for loans between ₹5 crore and ₹10 crore, with a 10% discount for women, SC/ST owners, and ZED-certified units. Most banks deduct it upfront from disbursement rather than billing it separately.
Is Udyam Registration mandatory for CGTMSE coverage?
Yes. Your bank has to enter your Udyam Registration Number (URN) into the CGTMSE portal when it files the guarantee application, so without a valid URN, coverage simply can't be applied. Registration is free at udyam.gov.in and takes about 10 minutes with your PAN and Aadhaar. Don't pay anyone to do this for you.
What happens if I default on a CGTMSE-guaranteed loan?
The bank invokes the guarantee, and CGTMSE compensates it for the guaranteed portion of the outstanding principal, up to the coverage percentage. On an 80%-covered ₹25 lakh loan, that's up to ₹20 lakh to the bank; the rest stays the bank's risk. Importantly, the guarantee protects the lender, not you. You're still legally on the hook for the full loan, and a default still shows up as a negative mark on your CIBIL record.
What's the maximum CGTMSE guarantee amount, and is coverage even mandatory?
The ceiling for CGS-I (banks, NBFCs, and most lenders) was raised to ₹10 crore per borrower, effective April 1, 2025; Regional Rural Banks still cap at ₹2 crore. As for whether you need it: coverage isn't compulsory, you can apply for an MSME loan without it, but without CGTMSE most banks will ask for collateral or a third-party guarantor. For businesses without much to pledge, this is often the only realistic path to institutional credit. If you only need up to ₹10 lakh, the
Mudra Loan eligibility checker is worth comparing too, since it doesn't require CGTMSE coverage at all.
