MSMEs can access up to ₹1 crore loans without collateral

Micro, small, and medium-sized enterprises (MSMEs) can now get loans up to ₹1 crore without offering any collateral. This program aims to boost economic growth and encourage innovation. It will help businesses manage their working capital and invest in their infrastructure. Accessing finance has often been difficult for MSMEs because they usually need to provide security, like property or equipment. This new initiative allows these businesses to secure loans without needing to pledge any assets. The article explains how this collateral-free loan program works, including eligibility criteria and the loan application process. A collateral-free MSME loan is an unsecured business loan. It supports small businesses by eliminating the need for security. This makes it easier for them to grow, invest in infrastructure, and manage cash flow. The CGFTMSE program charges a guarantee fee based on the loan amount. The fees vary for different loan slabs. For loans up to ₹10 lakhs, the fee is 0.37%. For loans above ₹1 crore, the fee goes up to 1.20% for amounts up to ₹2 crores. To secure a collateral-free MSME loan, businesses should carefully review the interest rates and fees. It is crucial to avoid falling into a debt trap. By planning carefully, companies can use these loans to enhance their operations and achieve economic growth. However, they must also be aware that taking a loan carries its own risks.