Small businesses to get collateral-freeloans up to ₹10 cr.

The Delhi government on Tuesday signed a memorandum of understanding (MoU) with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to provide collateral-free loans of up to ₹10 crore to new and existing micro and small enterprises (MSEs).

Terming the initiative a “major boost” for small entrepreneurs, Chief Minister Rekha Gupta said loan guarantees will be jointly shared by the city government and CGTMSE, a Central government entity, under the Delhi Credit Guarantee Scheme.

According to the Chief Minister’s Office (CMO), CGTMSE will provide guarantee cover of 75-90% of the loan amount while the remaining portion will be backed by the Delhi government.

“As a result, up to 95% of loans extended by banks will be government-guaranteed, reducing banks’ exposure to just 5% and encouraging them to lend more confidently to small businesses,” read a statement from the CMO.

The scheme aims to help small entrepreneurs by enabling them to secure loans without providing any collateral or security.

Ms. Gupta said lakhs of youth in Delhi aspire to start ventures in manufacturing, services, and allied sectors, but often struggle due to a lack of financial support. “This initiative will ease access to capital, reduce risks for banks, and improve Delhi’s business environment while promoting innovation, employment generation, and an inclusive urban economy,” she said.

The scheme will cover sectors such as manufacturing, services, retail, and education, and skill-training institutions. A dedicated fund of ₹50 crore has been created, which is expected to help banks extend loans, the CMO stated. “Leveraging this limited corpus, banks will be able to extend loans amounting to nearly ₹2,500 crore. The fund may be enhanced in the future if required,” it stated.

‘Robust ecosystem’

The government initially aims to reach one lakh beneficiaries with no upper cap. Special assistance will be extended to first-time and women entrepreneurs to encourage wider participation, it added.

“The initiative is expected to create new employment opportunities and foster a robust and sustainable MSE ecosystem in Delhi,” the CMO stated.