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Financial Support for Revival of Stressed MSMEs
Subordinate Debt with Govt. Guarantee
Based on promoter's stake
Government guarantee through CGTMSE
SMA-2 & NPA accounts
With moratorium up to 7 years
The Credit Guarantee Scheme for Subordinate Debt (CGSSD) is a Government of India initiative launched by the Ministry of Micro, Small and Medium Enterprises (MSME) to support financially stressed MSMEs. The scheme is implemented through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
The primary objective of CGSSD is to help viable but stressed MSMEs revive their business by providing subordinate debt to the promoters. The loan is given to the promoter, who infuses the amount into the MSME as equity or quasi-equity, thereby improving the financial health of the business and making it eligible for restructuring under RBI guidelines.
Under the scheme, the Government provides a 90% guarantee cover through CGTMSE, while the remaining 10% is contributed by the promoter. This significantly reduces the lending risk for banks and improves access to finance for eligible MSMEs.
The scheme is specifically designed for businesses facing financial stress but having the potential to become commercially viable again. It supports business continuity, protects employment, and strengthens the MSME sector.
The scheme is launched by the Ministry of MSME and implemented through CGTMSE, providing financial support to revive stressed but viable MSMEs.
Eligible promoters can receive subordinate debt equal to 15% of their stake (equity + debt) or ₹75 Lakhs, whichever is lower, subject to the lender's assessment.
CGTMSE provides 90% guarantee coverage on the sanctioned subordinate debt, while the promoter contributes the remaining 10%, reducing the risk for lending institutions.
The loan is provided to the promoter and must be infused back into the MSME as equity, quasi-equity, or subordinate debt, helping improve the company's financial position.
The loan tenure can extend up to 10 years, including a moratorium of up to 7 years on principal repayment, allowing businesses sufficient time for recovery.
The scheme assists eligible MSMEs in restructuring their existing debt under RBI guidelines, enabling them to restore operations and improve financial stability.
Stressed MSMEs — the scheme is applicable to MSMEs classified as SMA-2 or NPA accounts that are considered commercially viable for restructuring by the lending institution.
Existing MSME — the MSME should have been a standard account as on 31 March 2018 and should have remained operational during FY 2018-19 and FY 2019-20.
Eligible Promoters — the loan is sanctioned to the promoter(s) of the MSME, who must infuse the borrowed amount into the business as equity or quasi-equity.
Commercial Viability — the lending bank must determine that the MSME has the potential to recover and become financially sustainable after restructuring.
Clean Credit History — fraud accounts and willful defaulters are not eligible under the scheme.
Business Revival Support — provides much-needed capital to financially stressed MSMEs, helping them restart operations, improve cash flow, and regain financial stability.
Reduced Risk for Banks — with 90% government guarantee coverage, banks can confidently extend financial assistance to eligible MSMEs with lower lending risk.
Strengthens Net Worth — the subordinate debt is infused into the business as equity or quasi-equity, improving the company's balance sheet and credit profile.
Long Repayment Tenure — the scheme offers repayment flexibility with up to 10 years tenure and a principal repayment moratorium of up to 7 years, reducing financial pressure on businesses.
No Additional Financial Burden — the promoter receives financial support without disturbing the existing loan structure, making business restructuring smoother and more effective.
Employment & Business Continuity — by reviving stressed MSMEs, the scheme helps preserve jobs, maintain business operations, and contribute to economic growth.
Udyam Registration Certificate.
Certificate of Incorporation / Business Registration.
Company PAN Card.
Promoter's Aadhaar Card & PAN Card.
KYC Documents of Promoters.
Audited Financial Statements.
Latest Bank Statements.
Existing Loan Account Details.
Proof of Promoter's Stake in the Business.
CIBIL Report (if required by the bank).
MSME Restructuring Proposal.
Business Revival Plan / Project Report.
Any additional documents requested by the lending bank or CGTMSE during loan processing.
Important Note: CGSSD is available only for commercially viable stressed MSMEs. The subordinate debt is sanctioned by eligible Scheduled Commercial Banks to the promoter and must be infused back into the MSME as equity or quasi-equity in accordance with RBI restructuring guidelines.
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