MSME Loan Schemes 2026 Compared: CGTMSE, MUDRA, PMEGP, Stand-Up India and PM Vishwakarma — Which One Fits
- Pick by need and size: MUDRA for up to ₹20 lakh of working capital, PMEGP for a new unit with a 15–35% subsidy, CGTMSE for collateral-free limits up to ₹10 crore, Stand-Up India for women and SC/ST greenfield projects.
- Only PMEGP and PM Vishwakarma carry a subsidy; every other scheme is a loan or a guarantee that must be repaid in full.
- All of them are routed through a bank branch that assesses viability, so a project report and clean GST and ITR history matter more than the scheme name.
India has more MSME credit schemes than most owners can name, and the names are used loosely — "MUDRA loan" has become shorthand for any small-business loan, and "CGTMSE" is often assumed to be money rather than a guarantee. The confusion costs applicants time, because each scheme suits a specific size, stage and borrower. This guide compares the central schemes live in 2026 on the questions that decide an application: how much, on what terms, who qualifies, and what the bank will ask for.
The schemes side by side
| Scheme | What it is | Max amount | Subsidy / guarantee | Who it is for |
|---|---|---|---|---|
| PM MUDRA Yojana | Working capital or small term loan, no collateral | Shishu ₹50,000 · Kishore ₹5 lakh · Tarun ₹10 lakh · Tarun Plus ₹20 lakh | Guarantee through CGFMU; no subsidy | Non-farm micro enterprises; Tarun Plus needs a repaid Tarun loan |
| CGTMSE | Guarantee that lets banks lend without collateral or third-party guarantee | ₹10 crore | Cover 75–85% (higher for women, NE region, micro loans); guarantee fee 0.37%–1.35% p.a. by slab | Udyam-registered micro and small enterprises, new or existing |
| PMEGP | Bank term loan for a new unit with margin-money subsidy | Project cost ₹50 lakh (manufacturing) / ₹20 lakh (service) | Subsidy 15% urban / 25% rural general; 25% / 35% for special categories; locked for 3 years | New enterprises only; owner contribution 5–10% |
| Stand-Up India | Composite loan (term + working capital) for a greenfield enterprise | ₹10 lakh – ₹1 crore | Covered under CGSSI; margin up to 15% with convergence of other schemes | Women and SC/ST entrepreneurs holding at least 51% |
| PM Vishwakarma | Collateral-free loan for traditional artisans with skill training | ₹1 lakh first tranche, ₹2 lakh second | Interest subvention to 5% for the borrower; toolkit incentive | 18 notified trades (carpenter, tailor, goldsmith, potter, etc.) |
| CGSS (startups) | Guarantee on loans to DPIIT-recognised startups | ₹10 crore | Cover up to 85% on loans up to ₹10 crore after the 2025 expansion | DPIIT-recognised startups with revenue |
| Mutual Credit Guarantee Scheme (MCGS-MSME) | Guarantee for machinery and equipment term loans | ₹100 crore | 60% cover on the loan | Udyam MSMEs buying plant and machinery; 75% of project cost must be equipment |
Choosing by situation
- Starting a small unit with no track record: PMEGP if manufacturing or a service with a physical unit (the subsidy is real money); MUDRA Shishu or Kishore for a trading or service start without a project of PMEGP size.
- Running business, needs working capital, no property to pledge: cash-credit limit under CGTMSE, sized by the turnover method; MUDRA Tarun Plus if the need is under ₹20 lakh and a Tarun loan was repaid.
- Buying machinery: term loan under CGTMSE up to ₹10 crore, or MCGS-MSME for larger equipment purchases.
- Woman or SC/ST founder, first enterprise: Stand-Up India, which banks are mandated to sanction at every branch; it can be combined with PMEGP subsidy in some cases.
- Tech startup with revenue: CGSS, because DPIIT recognition and higher cover make banks comfortable without collateral.
What the bank asks for in every case
- Udyam registration and, for CGSS, DPIIT recognition.
- KYC of the enterprise and promoters; PAN; GST registration where applicable.
- Two or three years of ITRs and audited or CA-certified financials for existing units; GSTR-3B summaries.
- Bank statements for 12 months.
- A project report for term loans (PMEGP, Stand-Up India, machinery) with DSCR above 1.5; CMA data for working-capital limits above ₹1 crore.
- Quotations for machinery; lease or ownership of premises; licences (FSSAI, pollution consent, shop establishment) as relevant.
- Promoter contribution evidenced in the bank account — 5–10% for PMEGP, 10–25% elsewhere.
State schemes that stack on top
Most states add their own layer, and several of them can be combined with the central schemes above: interest subvention of 3–7% on term loans for new micro units (Uttar Pradesh, Madhya Pradesh, Rajasthan), capital-investment subsidies of 15–35% in notified districts, stamp-duty and electricity-duty exemptions for new manufacturing units, and dedicated women-entrepreneur subsidies. These are claimed after sanction through the District Industries Centre or the state's single-window portal, usually within six to twelve months of commercial production, and require the Udyam certificate, the bank's sanction letter and proof of investment. Ask the bank branch which state schemes it has processed recently; a branch that has handled a scheme before is far faster the second time.
Timelines and costs to expect
- MUDRA: 7–15 working days at a cooperative branch; processing fee usually nil for Shishu.
- CGTMSE-covered limits: 3–6 weeks; guarantee fee charged annually on the outstanding or sanctioned amount by slab, borne by the borrower unless the bank absorbs it.
- PMEGP: 6–10 weeks including the district task-force interview and EDP training; subsidy is credited to the loan account and locked for three years.
- Stand-Up India: 4–8 weeks; the portal tracks the application at the branch.
Before choosing, run your numbers through the Loan Eligibility Engine — it maps turnover, vintage, category and purpose to the schemes you actually qualify for and the amount a bank is likely to sanction, so you apply once, under the right scheme.
Common mistakes
- Applying for PMEGP for an existing business. It is for new units only; the subsidy will be rejected or recovered.
- Treating CGTMSE as a grant. It is a guarantee; the loan, interest and guarantee fee are all payable.
- Asking for a MUDRA Tarun Plus loan without a repaid Tarun loan. Eligibility fails at the first check.
- A project report with no promoter contribution shown. Every scheme requires it; the bank will not proceed.
- Multiple applications to multiple branches at once. CIBIL enquiries pile up and each branch sees the others.
- Paying a consultant who promises "government loan approval". Approval sits with the bank's credit officer and, for PMEGP, the district task force; nobody else can grant it.
Do it yourself in minutes — free to try, no login needed.
Open Loan Eligibility Engine →Frequently asked questions
Which MSME scheme gives a subsidy rather than a loan?
PMEGP, which credits a margin-money subsidy of 15–35% of project cost to the loan account of a new unit (locked for three years), and PM Vishwakarma, which subsidises interest for notified artisan trades. MUDRA, CGTMSE, CGSS, MCGS and Stand-Up India are loans or guarantees repaid in full.
What is the difference between MUDRA and CGTMSE?
MUDRA is a loan product for micro enterprises up to ₹20 lakh, delivered by banks, small finance banks and NBFCs with its own guarantee behind it. CGTMSE is not a loan but a credit-guarantee trust that covers 75–85% of a bank's loss on collateral-free MSME loans up to ₹10 crore, letting the bank lend larger amounts without property security.
Can I get a collateral-free business loan of ₹1 crore?
Yes, if the business is Udyam-registered and viable: banks sanction working-capital limits and term loans up to ₹10 crore under CGTMSE without collateral or third-party guarantee. The bank assesses viability through CMA data or a project report and charges an annual guarantee fee by slab.
Who is eligible for Stand-Up India?
Women entrepreneurs and SC or ST entrepreneurs aged 18 or above, setting up a greenfield enterprise in manufacturing, services, trading or allied agriculture, holding at least 51% of a non-individual enterprise. Loans range from ₹10 lakh to ₹1 crore as a composite loan, and every scheduled commercial bank branch is expected to sanction at least one to each category.
General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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