Beyond MUDRA: 10 Lesser-Known Credit Guarantee Schemes for MSME Loans
India's credit guarantee ecosystem extends far beyond the popular MUDRA scheme, offering specialized financing solutions for startups and MSMEs across different sectors and growth stages. Here's a comprehensive guide to 10 powerful yet underutilized credit guarantee schemes that early-stage founders should consider for non-dilutive funding.
Credit Guarantee Scheme for Startups (CGSS)
Launch Year: 2022 | Nodal Body: NCGTC | Website: Startup India Portal
Who Is It For: DPIIT-recognized startups with stable revenue streams from any sector, particularly those in 27 priority Champion Sectors under Make in India
How Much Can You Raise: Up to ₹20 crore (enhanced from ₹10 crore in 2025), with 80% guarantee for loans up to ₹3 crore, 75% for ₹3-5 crore range, and 65% for ₹5-20 crore
What You Can Use It For: Working capital, term loans, technology development, R&D activities, market expansion, scaling operations, equipment purchase
Access & Application: Through banks, NBFCs, or SEBI-registered Alternative Investment Funds; automatic guarantee issuance upon eligibility verification by member institutions
Why It's a Hidden Gem: Offers significantly larger loan amounts than MUDRA with reduced guarantee fee of just 1% for priority sectors (down from 2%). Zero NPA record till date demonstrates strong risk management
Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)
Launch Year: 2025 | Nodal Body: NCGTC | Website: NCGTC Portal
Who Is It For: Manufacturing MSMEs with valid Udyam registration, no NPA status, requiring minimum 75% of project cost for equipment/machinery
How Much Can You Raise: Up to ₹100 crore with 60% guarantee coverage, available for 4 years or until ₹7 lakh crore cumulative guarantee is reached
What You Can Use It For: Equipment and machinery purchase, plant expansion, technology upgradation, manufacturing infrastructure development
Access & Application: Through scheduled banks, NBFCs, and AIFIs registered with NCGTC via online portal submission
Why It's a Hidden Gem: Supports the Make in India initiative with loans 100 times larger than MUDRA's maximum. Offers 8-year repayment tenure with 2-year moratorium on principal, specifically targeting manufacturing growth.
Credit Guarantee Scheme for Animal Husbandry & Dairying (CGAHD)
Launch Year: 2021 | Nodal Body: NABSanrakshan (NABARD subsidiary) | Website: NABARD CGAHD
Who Is It For: MSMEs and entrepreneurs in livestock/dairy sector, first-generation entrepreneurs, underprivileged sections focusing on rural economy
How Much Can You Raise: Within MSME-defined ceilings with 25% guarantee coverage backed by ₹750 crore corpus
What You Can Use It For: Dairy processing, meat processing, animal feed manufacturing, veterinary facilities, breed improvement technology, waste-to-wealth management
Access & Application: Through scheduled banks and designated lending institutions under the AHIDF scheme framework
Why It's a Hidden Gem: India's first-ever credit guarantee for livestock sector with integrated 3% interest subvention under AHIDF. Targets the underserved rural entrepreneurship space with sector-specific expertise.
Credit Guarantee Scheme for FPO Financing
Launch Year: 2021 | Nodal Body: NABSanrakshan | Website: NABARD FPO Scheme
Who Is It For: Farmer Producer Organizations (FPOs), agriculture-based collectives with valid registration under the 10,000 FPO formation scheme
How Much Can You Raise: Up to ₹2 crore with 85% guarantee coverage up to ₹1 crore, 75% for ₹1-2 crore range, maximum ₹1.5 crore ceiling
What You Can Use It For: Working capital, term loans, input procurement, processing facilities, marketing, value addition activities
Access & Application: Through 58 empanelled lending institutions with quarterly application cycles and specific eligibility assessment tools
Why It's a Hidden Gem: Provides collective farming support with higher guarantee percentages than individual schemes. 5-year guarantee coverage period with potential for 2 guarantee covers per FPO.
Credit Guarantee Fund Scheme for Stand Up India (CGSSI)
Launch Year: 2016 | Nodal Body: NCGTC | Website: Stand Up Mitra
Who Is It For: SC/ST and women entrepreneurs above 18 years for greenfield enterprises, requiring 51% ownership stake in non-individual entities
How Much Can You Raise: ₹10 lakh to ₹1 crore composite loans covering 75% of project cost with varying guarantee coverage
What You Can Use It For: Manufacturing, trading, services sector setup, working capital, term loans, equipment purchase for new ventures
Access & Application: Through all scheduled commercial bank branches with dedicated targets, online portal support, and handholding assistance
Why It's a Hidden Gem: Each bank branch must lend to at least one SC/ST and one woman entrepreneur, ensuring dedicated focus. 7-year repayment with 18-month moratorium and comprehensive ecosystem support.
Credit Guarantee for e-NWR based Pledge Financing (CGS-NPF)
Launch Year: 2024 | Nodal Body: NCGTC | Website: WDRA CGS Info
Who Is It For: Farmers (especially small & marginal), FPOs, MSMEs, and traders with stored agricultural/horticultural produce in WDRA-accredited warehouses
How Much Can You Raise: Up to ₹75 lakh for agricultural purposes, ₹200 lakh for non-agricultural, with 85% guarantee for small/marginal farmers up to ₹3 lakh
What You Can Use It For: Post-harvest financing, working capital against stored commodity pledges using electronic warehouse receipts
Access & Application: Through scheduled and cooperative banks, requires WDRA-registered warehouse storage with e-NWR generation
Why It's a Hidden Gem: Prevents distress selling by farmers, enables optimal price realization timing. Interest rate capped at MCLR+3% with minimal guarantee fees (0.40% for farmers).
PM Formalisation of Micro Food Processing Enterprises Credit Support (PMFMPE)
Launch Year: 2020 | Nodal Body: Ministry of Food Processing Industries | Website: PMFME Portal
Who Is It For: Micro food processing units, FPOs, SHGs, cooperatives in unorganized food sector, One District One Product (ODOP) focus
How Much Can You Raise: 35% credit-linked capital subsidy up to ₹10 lakh per unit, requiring minimum 10% beneficiary contribution
What You Can Use It For: Food processing equipment, value addition facilities, formalization, branding, marketing, common processing infrastructure
Access & Application: Through nodal banks and State Nodal Agencies, integrated with CGTMSE for collateral-free loans up to ₹5 crore
Why It's a Hidden Gem: Part of Aatmanirbhar Bharat with ₹10,000 crore outlay targeting 2 lakh enterprises. Combines subsidy with credit guarantee for comprehensive support.
Emergency Credit Line Guarantee Scheme (ECLGS)
Launch Year: 2020 | Nodal Body: NCGTC | Website: NCGTC ECLGS
Who Is It For: COVID-affected MSMEs, existing borrowers with up to 60 days past due, hospitality, healthcare, and manufacturing units
How Much Can You Raise: Up to 30% of existing outstanding credit with 100% government guarantee, ₹5 lakh crore total scheme corpus
What You Can Use It For: Emergency working capital, operational liabilities, business restart funding, oxygen plant setup (ECLGS 4.0)
Access & Application: Through existing banking relationships, automatic eligibility for qualifying accounts across multiple ECLGS versions
Why It's a Hidden Gem: Offers 100% guarantee coverage (rare in credit guarantee schemes) with interest rate caps and flexible moratorium periods. Saved 14.6 lakh MSME accounts from becoming NPAs.
Export Credit Guarantee Scheme for MSME Exporters (Upcoming)
Launch Year: 2024 (Expected) | Nodal Body: NCGTC (Expected) | Website: To be announced
Who Is It For: Export-oriented MSMEs, well-run exporters, Export Oriented Units (EOUs) with established export track records
How Much Can You Raise: Up to ₹20 crore with 95% guarantee for micro/small enterprises, 75% for medium enterprises
What You Can Use It For: Export working capital, term loans for expansion, modernization, export infrastructure development
Access & Application: Expected launch by September 2025 through partner banks, separate application process from ECGC schemes
Why It's a Hidden Gem: First dedicated credit guarantee scheme for MSME exporters (ECGC covers trade credit, not expansion capital). Targets 45% of India's exports that come from MSMEs.
Startup India Seed Fund Scheme Credit Component (SISFS)
Launch Year: 2021 | Nodal Body: DPIIT through incubators | Website: SISFS Portal
Who Is It For: Early-stage DPIIT-recognized startups incorporated <2 years, requiring 51% Indian promoter shareholding and technology-enabled solutions
How Much Can You Raise: Up to ₹50 lakh via convertible debentures/debt instruments at repo rate interest with 5-year maximum tenure
What You Can Use It For: Proof of concept validation, prototype development, product trials, market entry, commercialization activities
Access & Application: Through 300+ approved incubators nationwide, applications via Startup India portal with simultaneous submissions to 3 incubators allowed
Why It's a Hidden Gem: Provides unsecured debt funding without guarantor requirements. ₹945 crore corpus targeting 3,600 startups with milestone-based disbursements and integrated incubation support.
Key Insights for Early-Stage Founders
Geographic Advantage: Many schemes offer enhanced benefits for Tier 2/3 cities, northeastern states, and aspirational districts with higher guarantee coverage and reduced fees.
Sectoral Specialization: Unlike MUDRA's broad approach, these schemes offer sector-specific benefits like interest subvention, technical support, and dedicated institutional frameworks.
Scalability Factor: Several schemes (CGSS, MCGS-MSME) offer significantly higher loan amounts than MUDRA, enabling true scaling rather than just business initiation.
Complementary Usage: These schemes can be used alongside MUDRA for different business needs - MUDRA for initial setup, specialized schemes for growth and expansion.
Application Strategy: Many schemes have seasonal or cyclical application windows, requiring strategic planning. Early registration with nodal agencies ensures faster processing when funding needs arise.
The credit guarantee landscape beyond MUDRA offers sophisticated financial instruments tailored to specific entrepreneur profiles and business needs. For early-stage founders, understanding and leveraging these schemes can provide crucial non-dilutive capital for sustainable growth while building credit history for future institutional funding rounds.