Govt., Centre partner to offer collateral-free loans to small businesses

  New Delhi

The Delhi government has joined hands with the Centre’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to offer collateral-free loans to Micro and Small Enterprises (MSEs), the Chief Minister’s Office (CMO) announced on Wednesday.

Describing the partnership as a “new chapter” in Delhi’s economic growth, Chief Minister Rekha Gupta said it will enable thousands of small entrepreneurs to access formal credit without the burden of providing collateral, while also reducing banks’ lending risks.

The scheme will extend to multiple sectors, including manufacturing, services, retail, and education, and aims to strengthen the Capital’s small business ecosystem. Under the programme, the loan guarantee provision will be jointly shared by the Delhi government and CGTMSE. “According to the proposed guarantee structure, borrowers from different categories will be provided guarantee coverage of up to 95%,” the CMO said . Ms. Gupta said a budgetary provision of ₹5 crore has been made for 2025-26, with a phased contribution of ₹50 crore expected in partnership with CGTMSE.

‘Will create jobs’

She said the collaboration will increase credit flow to Delhi’s Micro, Small, and Medium Enterprises (MSME) sector and promote “job creation, innovation, and economic resilience”. “This initiative will provide targeted support to new enterprises and women entrepreneurs,” the CM said.

For small enterprises, loans up to ₹10 crore will receive 75% coverage from CGTMSE and 20% from the Delhi government, while for women entrepreneurs and MSMEs promoted by Agniveers, loans up to ₹10 crore will get 90% coverage from CGTMSE and 5% from the Delhi government.

For micro enterprises, loans up to ₹5 lakh will be covered 85% by CGTMSE and 10% by the Delhi government, and for loans between ₹5 lakh and ₹10 crore, the coverage will be 75% and 20% respectively. CGTMSE, which provides guarantees to banks and other financial institutions to enable small enterprises to borrow without collateral, currently works with 276 lending institutions across India and has a total guarantee portfolio exceeding ₹9.34 lakh crore. “The government wants business owners to grow their enterprises without obstacles,” the CM said.