Collateral free credit upto 1 crore for MSME (Micro, Small, Medium Enterprises)

[Suresh Sambandam]

Check this out:

http://www.cgtmse.in/

[Venkat]

But i talked to bank managers and they said they are not aware of this scheme and 'instructions' havent been provided. it could also be that they are trying to avoid any NPAs against their names just in case...

[Suresh Sambandam]

I agree with you. Surely there is a big gap in awareness among banks (especially at the branch level) about this. Business loan products from banks like ICICI offer working capital loan of 1 Crore with a collateral security of 60 Lakhs i.e. 60% risk cover. CGTSME gives them 75% risk cover, so it shouldn't be an issue. Right? All new roads are going to be difficult to tread at least during the early days...

[Jambu Ganesh Kumar]

my experience - Banks offer loans only to those in business for 3 yrs along with collateral only. Banks shed crocodile tears for SME's in media; PSB's like SBI want to jump into home loans , but don't care for startup funding. ICICI bank organises seminars and sponsors articles in ET - 'SME dialogue' regularly; But walk into their bank , say you are launching a startup having quit employment, they would flatly refuse a loan even with collateral.

But these folks might chase you for credit cards ! Credit guarantee fund is just to employee a few govt folks and keep promoting them every few years ; unfortunately not for entrepreneurs . banks are neither aware nor care for this CGTSME

jambu.

[Vara Prasad]

Dear Mr.Jambu, Your point is right and that situation has evolved over many decades bcos of the bad experience of the banks in hte past like some business becoming NPAs after believed to be good. Because of this,the whole bunch of MSMEs are believed to be risky due to the lack of transparency, discipline and some bad performances of the some businesses in the sector.

As one of the solution to this, RBI has instructed all the banks in India to take a look at an MSME with an external opinion on its credibility. This is called a credit rating report by external rating agencies which helps a banker to leverage on it and take a support that the lending has been done also based on a external third party opinion. This has been successful across the sector and many MSMEs have benefitted out of this. But it has a long way to go as most entrepreneurs are not aware of this tool just like you. My suggestion would be to know about it and help yourself in building your credibility to be looked at as a good business.

I am from CRISIL Ratings, if required you can know from me too. My number is 9840725262. Regards...

[Suresh Sambandam]

Dear Vara Prasad,

Thanks for the great response! This strengthens the initial message I was trying to send across, even though I didn't want to defend my post. I am glad to see this response from you!

I feel that as SMEs we need not shy away from these options. Surely it might be difficult, but if many people take this route it makes it easier for SMEs as a whole. We need critical mass for anything to succeed.

Suresh

[A.Balachandran]

Dear Suresh

Apart from the SMERA, you also can represent to CGTMSE (incase if the Bank has not been genuine to you).

Also, for a Technology start ups soft loan are available through Business Incubators (up to Rs.25 Lakhs with out collateral). Even in our TBI we have sanctioned around Rs.1 Crore to around 10 Start ups. The range of support was between Rs.2 Lakhs to Rs.20 Lakhs (no collateral). Please visit our website www.vittbi.com for more details.

For innovative ideas , a number of grant programs (both in Government and Non-Governmental sectors) are available. We are also coordinating two such programs where the grant amount is around Rs.60 Lakhs (if the innovator walks through the process). We have assisted more than 10 innovators to obtain TePP grant (Govt of India). The total funding was around Rs.50 Lakhs and the range was Rs.75000 to Rs.15 Lakhs/.

One can also apply to Indian Angels network and TiE Chennai fund if the idea & business model are innovative in nature.

Balachandran

[Karvi White]

Sir,

This is Karviwhite. I want to talk to you, Plz advise your leisure time.

Also i am looking for an loan for my new business idea. Plz advise.

Thanks in advance.

[Karvi White]

Sir,

This is Karviwhite. I want to talk to you, Plz advise your leisure time.

Also i am looking for an loan for my new business idea. Plz advise.

Thanks in advance.

[Karvi White]

Kindly advise me what time i can contact you.

[P.Jeyaselvam]

It is a Good Scheme. Ihope that this is boost for the MSME new Entrepreneur.

[Srikanth]

This scheme is fairly easy to get for existing Micro and small businesses if certain conditions are met.

1) Always approach your existing banker. Nationalised banks are quite open for this scheme.
2) If you have an existing loan with good conduct AND without collateral, enhancement can be easily fitted into this scheme. If you have a loan with collateral, enhancement is not normally possible under this scheme. However, if you have a collateralled working capital loan, a new term loan under CGTMSE scheme is possible.
3) Prior conduct of the account - No cheque bouncing, timely submission of Stock statement, QOS and renewal application. This is pretty much non negotiable.
4) In case of start ups, if the business model is time tested, bankers would be willing to fit it under the scheme. Make sure, you have some verifiable firm enquiries, if not commitments.
5) Your proposal should almost always contain the following
a) Have a clear and well defined marketing plan and attach your MarCom materials (If they are not ready, their blue print) along with your loan papers and projection. This is not a requirement and that's precisely why you should do it.
b) Add a relevant case study
c) A sheet of paper titled "Frequently Asked Questions" from the banker's perspective.
d) Always present your projections in CMA format.
e) Include Sensitivity Analysis in projections. Bankers love it.
f) Prepare a well made Project finance document replete with graphs, ratio analysis, working details and a good write up on the business process. Sample project finance document can be downloaded here,
g) Leave some blank sheets in your spiral bound proposals in some strategic places with this header and footer. "Deliberately left blank for taking notes". In my experience, nothing grabs attention more than this.
6) Even before starting to make the documents in 5 above. prepare a honest business plan to see if your idea is going to work. Main reason for start up failure is what I call "Somehow make it work syndrome". If you don't fall a prey to it, half the battle is won.

Best wishes.

Note: If you think this reply is a waste of electrons, blame it on the spammer who brought this topic to my attention!

I first by mistake posted this in unintended place. I since corrected it. Mods can delete this entry

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