1. Who are the eligible Member Lending Institutions (MLIs) under the Scheme?

All the Member Lending Institutions (MLIs) registered under CGS-I of the Credit Guarantee Scheme for Micro and Small Enterprises.

2. What is the maximum sub-debt amount eligible under the Scheme?

Under the Scheme, Promoter(s) of the MSME unit will be given credit facility equal to 50% of his/her stake in the MSME entity (equity plus debt) or ₹75 lakh whichever is lower as per last audited Balance Sheet.

Illustration 1 : If promoters have invested ₹100 lakh as equity/debt in a company, then 50% of ₹100 lakh, i.e. ₹50 lakh is eligible amount under sub-debt.

Illustration 2 : If promoters have invested ₹700 lakh as equity/debt in a company, then 50% of ₹700 lakh is ₹350 lakh. However, eligible amount under sub-debt would be ₹75 lakh.

3. Can you please give some scenarios for computation of sub-debt amount eligible under the Scheme?

Computation methodology: (₹. Lakh)

However, the Sub-debt eligible limit shall not exceed the original debt of the beneficiary.

4. Any cut-off date / eligibility is prescribed for MSMEs for availing the benefit under the Scheme?

The scheme is applicable for those MSMEs whose accounts have been standard as on 01.01.2016 and have been in regular operations, either as standard accounts or as NPA accounts during the financial year 2016-17, 2017-18, 2018-19 and 2019-20 even if they did not remain in regular operation in FY 2020-21 & FY 2021-22 provided such accounts are viable as per MLI’s assessment and expect to come out of financial stress by availing this facility.

5. Will MLIs be required furnish any undertaking with CGTMSE for the purpose of this Scheme?

Yes, MLIs will be required to submit an Undertaking to CGTMSE for the purpose of this Scheme as per the prescribed formal.

6.Whether NBFCs are allowed under the sub-debt scheme?

No. Presently, all the Member Lending Institutions (MLIs) registered under CGS-I of the Credit Guarantee Scheme for Micro and Small Enterprises are eligible.

7. When will the guarantee cover commence for the eligible credit facility?

The guarantee cover will commence from the date on which guarantee fee proceeds are credited to bank account of the Trust.

8. How long the guarantee cover is available for credit facilities extended to a particular borrower?

Guarantee will commence from guarantee start date and shall run through the agreed tenure of the facility subject to payment of guarantee fee on annual basis.

9. What is the process of issue of Guarantees under the scheme?

On sanction of sub-debt, the Banks login into CGTMSE Portal and apply for guarantee coverage. On receipt of application, Guarantee is approved by CGTMSE within 24 hours and on paying the Guarantee fee, the Guarantee becomes live. No documents are sought at the time of application lodgement of guarantee.

10. Are the Borrowers who had earlier availed 15% of the promoters’ stake eligible for additional 35% for financing?

The borrowers who had earlier availed 15% of the promoters’ stake are allowed to avail additional 35% of the promoters’ stake, provided the overall maximum benefits availed under CGSSD does not exceed ₹75 lakh.

11. As per the Guidelines, 90% Guarantee coverage would come from scheme/Trust and remaining 10% from the promoter concerned. Is the 10% to be brought as upfront or it can be carved out from the Loan proceeds?

It is clarified that since 90% coverage would come from scheme, 10% shall be brought by the promoter concerned upfront.