Haryana MSME Loan Refund: Get 100% CGTMSE Fees Back for 5 Years
Hello businessmen!
In this blog, we are going to tell you about banking sector scheme that’s generally very helpful for businessmen who need term loans or working capital facilities from banks to operate their business.
When you take a loan from a bank, you often need to provide collateral security. However, many times, due to a lack of collateral security, you might not be able to get a term loan or credit limit facilities from the bank. To address this, the Government of India has created a Credit Guarantee Trust fund, which we also call CGTMSE.
1. Understanding Collateral-Free Loans and CGTMSE
Under this fund, banks are given a guarantee for your loan. To provide this guarantee, the CGTMSE fund charges a guarantee cover fee, which can be approximately 1.5% to 2% of the loan amount. Now, when you pay this cover fee to CGTMSE through the bank the government specifically to boost MSME units and ensure they get bank loans and credit facilities easily and also has provisions for a refund of this fee. This applies if their loan is covered under CGTMSE and the bank charges them the credit guarantee cover fee.
2. Haryana's State-Specific Refund Scheme
We’re specifically telling you about a Haryana state-specific scheme. Generally, these schemes can be applicable in every state, so if you belong to any other state, you should definitely study your state’s specific MSME guidelines. Generally, the provisions are similar in all, but now I am sharing information about the Haryana state-specific scheme.
This scheme is applicable throughout Haryana; there are no restrictions based on block categorization. Secondly, this scheme is applicable only for micro units. Micro units are defined as those where the investment in plant and machinery are up to ₹2.5 crore. Currently, the MSME Department of the Government of India has revised the definitions of MSMEs. So, micro units are now defined as those units where the investment in plant and machinery are up to ₹2.5 crore, or whose total annual turnover is up to ₹10 crore.
Such units, which we call micro units, if they take a term loan or working capital finance from a bank and do not have collateral security for these fundings, and they avail collateral-free funding from the bank, and during this process, if their credit facility is covered under the credit guarantee fund, then there is a provision for a refund of the cover fee they paid.
This is a very good scheme. If you are also associated with the banking sector, I would like to tell all of you that many bankers provide such facilities to micro units and also cover their loans in CGTMSE, but they are unaware of this scheme. Because of this, they are neither able to update their clients nor can the client take advantage of the refund provision for that fee. So, it’s a very good scheme. If you are associated with the banking sector, please ensure your clients get this benefit.
In Haryana, this scheme provides a 100% refund of the guarantee cover fee you charge from the client. This guarantee cover fee, which you charged for providing funding to micro units, whether on a term loan or working capital, is refundable on both. Another benefit here is that this cover fee refund will be given for the next 5 years.
3. Benefits for Businesses and Bankers
This is a great benefit! If you have taken a loan from any bank and availed collateral-free funding, or if you have taken its coverage in CGTMSE due to the absence of a third-party guarantee, then you can now get a refund from the Haryana Government for the cover fees you pay every year for that coverage. This benefit is given to you continuously for 5 years.
Now, the basic conditions for this are:
- The loan taken (either working capital or term loan) should be from a single lending institution (i.e., from one bank, not multiple banks), so you don’t face any issues.
- Your unit must be a micro unit. You need to keep this in mind.
- You should be in regular commercial production, because such benefits are not available for closed units.
- If NOC or CLU (Change of Land Use) is applicable, you should have it as per the applicability.
- Your unit should be registered under MSME and also registered with Haryana Udyam.
If we comply with these eligibility norms and take a loan from the bank, you can get a refund of the CGTMSE cover fees you paid on it.
The timelines for this are very important; please pay attention. The application needs to be submitted within three months from the date of commercial production. So, as soon as your unit starts operations after taking the loan etc., you need to submit your application within three months from the date of starting operations, so that you continue to receive this refund for 5 years.
This is a very good benefit. If you are a micro unit and are planning to take a loan from a bank, you should definitely try to take advantage of this scheme.
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