
MCGS: 60% Guarantee on MSME Loans up to ₹100 Crore
Introduction
ToggleKey Highlights of the Mutual Credit Guarantee Scheme (MCGS) for MSMEs
1. Guarantee Coverage
The scheme provides a 60% government-backed guarantee on loans extended by Member Lending Institutions (MLIs), which include Scheduled Commercial Banks (SCBs), All India Financial Institutions (AIFIs), and eligible Non-Banking Financial Companies (NBFCs).
2. Purpose of the Scheme
The credit facility is aimed at financing equipment and machinery purchases, helping MSMEs improve productivity and drive economic growth.
3. Implementation
The scheme is administered by the National Credit Guarantee Trustee Company Limited (NCGTC), a government-owned body under the Department of Financial Services, Ministry of Finance.
MSME Eligibility Criteria for MCGS
To qualify under the MCGS-MSME scheme, businesses must:
Be a registered MSME with a valid Udyam Registration Number.
Have no overdue loan repayments with any financial institution.
Ensure that at least 75% of the total project cost is dedicated to equipment or machinery procurement
Loan Approval & Guarantee Process
Loan Sanction: MSMEs apply for credit through any MLI.
Data Submission: The lender uploads loan details and pays the required fee on the NCGTC portal.
Guarantee Confirmation: After verification, NCGTC confirms 60% guarantee coverage, encouraging banks to lend more confidently to MSMEs
Supporting Tax Measures for MSMEs
Alongside MCGS, the government has implemented tax reforms to ease compliance and support small businesses:
Presumptive taxation under Sections 44AD and 44AE.
Relaxed tax audit thresholds under Section 44AB.
Exemption from TCS on the sale of certain goods (Section 206C).
Streamlined TDS rates for ease of calculation.
A proposal for a simplified Income Tax Bill, 2025 aimed at improving tax clarity and reducing legal complexity.
Key Takeaways for MSME Owners
Access up to ₹100 crore in loans with a 60% government guarantee.
Funds must primarily support machinery and equipment acquisition (minimum 75% of project cost).
MSMEs must maintain clean repayment records and hold valid Udyam registration.
Loans are available through banks, AIFIs, and select NBFCs, with guarantees routed via NCGTC.
The scheme complements recent tax reforms designed to make compliance easier and business operations smoother for small enterprises
About the Author
Manisha
Manisha is a seasoned content writer with deep expertise in business registration, tax laws, trademark regulations, and corporate compliance. His articles provide practical, easy-to-understand guidance that empowers entrepreneurs and businesses to confidently tackle legal and regulatory complexities