Quick answer: Ask the member lender whether CGTMSE cover is proposed, the eligible guaranteed amount, applicable annual or risk-based guarantee fee, who bears it, how long it is charged, taxes and what happens after renewal, restructuring or closure. Add it to processing, interest and other charges when comparing the loan; the guarantee protects the lender and does not cancel the borrower’s debt.
Price the guarantee before you price the loan
Treat the guarantee charge as one line in the full borrowing cost, not as a substitute for interest, processing fees, insurance, documentation costs or collateral-related expenses.
The decision in plain terms
The sanctioned credit facility and the amount actually covered under the guarantee.
The applicable guarantee-fee slab and whether the lender passes the charge to you.
Annual or recurring charges, processing fees and any separate renewal costs.
What to confirm in writing
The answer changes with the sanctioned credit facility and the amount actually covered under the guarantee, the applicable guarantee-fee slab and whether the lender passes the charge to you, annual or recurring charges, processing fees and any separate renewal costs. Compare two loans on total rupees paid over the same period. A lower interest rate can still lose if guarantee, processing and ancillary charges are materially higher.
Build your evidence file
Keep sanction letter and Key Facts Statement, lender calculation of guarantee-related charges, CGTMSE scheme document or current fee table, loan ledger showing when each charge was posted together.
| Record | Use it to verify |
|---|---|
| Sanction letter and Key Facts Statement | The sanctioned credit facility and the amount actually covered under the guarantee |
| Lender calculation of guarantee-related charges | The applicable guarantee-fee slab and whether the lender passes the charge to you |
| CGTMSE scheme document or current fee table | Annual or recurring charges, processing fees and any separate renewal costs |
| Loan ledger showing when each charge was posted | The sanctioned credit facility and the amount actually covered under the guarantee |
Where this decision can cost extra time or money
- A salesperson quotes one percentage without identifying the covered amount.
- The fee is described as a refundable deposit when the written terms do not say so.
- The lender cannot reconcile the debit on your account with the sanction terms.
What this means for you
Compare two loans on total rupees paid over the same period. A lower interest rate can still lose if guarantee, processing and ancillary charges are materially higher.
Official references
- CGTMSE — Credit guarantee scheme information
- Ministry of MSME — MSME schemes and policy
- MSME Samadhaan — Delayed-payment information