Delhi Govt Announces ₹10 Crore Collateral-Free Loan Scheme for Entrepreneurs

The Delhi government has 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 for micro and small enterprises (MSEs), as per news reports.  

The initiative is aimed at improving access to finance for small entrepreneurs and strengthening Delhi’s business ecosystem. 

Loan Guarantee Structure and Coverage 

Under the Delhi Credit Guarantee Scheme, the loan guarantee will be jointly shared by the Delhi government and CGTMSE. According to the Chief Minister’s Office (CMO), CGTMSE will provide a guarantee cover ranging between 75–90% of the sanctioned 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 enables entrepreneurs to access institutional credit without providing collateral or third-party security, significantly lowering entry barriers for small business owners. 

Focus on Youth, Women and First-Time Entrepreneurs 

Terming the initiative a “major boost” for entrepreneurs, Chief Minister Rekha Gupta said the scheme would benefit lakhs of young aspirants seeking to start ventures in manufacturing, services, and allied sectors. 

“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. 

Special assistance will also be provided to first-time and women entrepreneurs to encourage broader participation. The government initially aims to support one lakh beneficiaries, with no upper limit on participation. 

Funding Corpus and Lending Potential 

A dedicated fund of ₹50 crore has been created under the scheme. According to the CMO, this limited corpus is expected to enable banks to extend loans of nearly ₹2,500 crore. The fund size may be increased in future, depending on demand and performance. 

The scheme will cover multiple sectors, including manufacturing, services, retail, education, and skill-training institutions. 

Read More: Delhi Government Proposes ₹50,000 Incentive for EV Conversions! 

Conclusion 

By reducing credit risk for banks and improving loan accessibility for entrepreneurs, the Delhi government’s partnership with CGTMSE is expected to strengthen the city’s micro and small enterprise ecosystem, accelerate job creation, and foster inclusive economic growth. 

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