Government gave MSME sector gift before budget, security will be available on loans up to 100 crores

The central government on Wednesday approved the Mutual Credit Guarantee Scheme (MCGS-MSME). Its purpose is to promote micro, small and medium enterprises. The scheme fulfills the promise made in the previous budget and has been implemented a few days before the Union Budget of 2025.

Large debt will be available with 60% guarantee cover

Under this scheme, MSMEs will be given 60% guarantee cover on loans up to Rs 100 crore. This loan will be given mainly to buy plant, machinery and equipment.

MSMEs will get big benefit from Mutual Credit Guarantee Scheme

The MSMEs whose valid industry registration number (Udyam Registration Number) can avail the collateral-free loan under this scheme. In the scheme, it will be mandatory to use 75% loan on machinery or equipment, which will enable MSMEs to increase its production capacity.

A maximum of 8 -year repayment period will be given on loans up to Rs 50 crore, in which the principal payment will also be available for 2 years. This period can be further extended for large loans. At the time of guarantee application, MSMEs will have to submit 5% of the loan amount. Under the scheme, the guarantee fee will be waived for the first year, while for the next three years, 1.5% per year and then 1% per year fee will be charged.

According to the Finance Ministry, the scheme will take the manufacturing sector to new heights, which currently contributes 17% to GDP and employs over 2.73 crore people. The government is aiming to increase the contribution of manufacturing from this scheme to 25%.

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The biggest advantage of this scheme will be given to MSMEs as collateral-free loans, which will help in bringing fast growth in the country’s economy by increasing their production capacity. The scheme will be effective for the next 4 years or till the guarantee of Rs 7 lakh crore is released.

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