Credit Guarantee Scheme for Subordinate Debt (CGSSD)
Government of India
Credit Guarantee Scheme for Subordinate Debt (CGSSD)
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If your business is facing tough times, the Credit Guarantee Scheme for Subordinate Debt (CGSSD) is designed to help you bounce back. This scheme gives guaranteed loans to promoters, allowing them to inject fresh funds into their businesses. With this support, it becomes easier for you to recover, revive, and get your operations running again. Launched on June 24, 2020 by the Ministry of Micro, Small and Medium Enterprises through CGTMSE, the scheme offers guaranteed subordinate debt to promoters of stressed MSMEs, giving them the financial boost they need to revive and restructure their businesses.
Key Features
Financial Assistance
| Component | Assistance | Details |
|---|---|---|
| Maximum Subordinate Debt | ₹75 lakh or 15% of promoter's stake, whichever is lower | Based on the last audited balance sheet showing promoter's equity plus debt |
| Guarantee Coverage | 90% by CGTMSE, 10% by promoter | For ₹75 lakh subordinate debt, CGTMSE guarantees ₹67.5 lakh, promoter bears risk of ₹7.5 lakh |
| Tenure | Maximum 10 years with moratorium up to 7 years | Sufficient time for business revival; during moratorium, only interest needs to be paid |
| Interest Rate | Linked to external benchmark rates as per RBI guidelines | Banks may add spread as per their lending policy |
| Guarantee Fee | 1.50% per annum on guaranteed amount | Payable by borrower or as per arrangement with lender |
Eligibility Criteria
Who Can Apply
Eligible Candidates
- 1Promoters of MSME units (proprietorship, partnership, private limited company, or registered company)
- 2MSME should have had standard accounts as of March 31, 2018, and continued regular operations during FY 2018-19 and FY 2019-20
- 3MSME classified as stressed (SMA-2 or NPA) as of April 30, 2020, and eligible for restructuring under RBI guidelines
Who Cannot Apply
Ineligible Candidates
- MSME account classified as fraud or willful defaulter
- MSMEs that didn't have a standard account as of March 31, 2018, or weren't in regular operation during FY 2018-19 and FY 2019-20
- MSMEs not classified as stressed (SMA-2 or NPA) as of April 30, 2020, or not eligible for restructuring under RBI guidelines
Documents Required
KYC documents of promoters and MSME
Mandatory
MSME registration proof (Udyam Registration, etc.)
Mandatory
Last audited balance sheet and financial statements
Mandatory
Proof of SMA-2 or NPA classification
Mandatory
Restructuring proposal/plan
Mandatory
Declaration regarding banking arrangements and non-availment from other lenders
Mandatory
Any other documents required by the lending institution
Mandatory
How to Apply
Bank Branch
- 1Go to any scheduled commercial bank with your restructuring proposal and the required documents
- 2The bank will assess whether your business needs subordinate debt and if it's viable for the scheme
- 3Once the bank approves, they will apply for guarantee coverage through the CGTMSE portal
- 4After approval, you'll receive the subordinate debt as a personal loan, which must be infused as equity or quasi-equity into your MSME
- 5The loan will be treated as a separate account and will be monitored by the lender