Any collateral-free/third-party guarantee-free credit facility (both fund-based and non-fund based) extended by eligible institutions, to new as well as existing micro and small enterprises including service enterprises, with a maximum credit cap of Rs 100 lakh is eligible to be covered.
The guarantee cover available under the scheme is to the extent of 75 per cent/80 per cent of the sanctioned amount of the credit facility, with a maximum guarantee cap of Rs 62.50 lakh/Rs 65 lakh. The extent of guarantee cover is 85 per cent for micro enterprises for credit up to Rs 5 lakh. The extent of guarantee cover is 80 per cent for (i) micro and small enterprises operated and/or owned by women; and (ii) all loans in the North-East Region. In case of default, the Trust settles the claim up to 75 per cent (or 80 per cent wherever applicable) of the amount in default of the credit facility extended by the lending institution. For this purpose, the amount in default is reckoned as the principal amount outstanding in the account of the borrower, in respect of term loan, and the amount of outstanding working capital facilities, including interest, as on the date of the account turning non-performing asset (NPA). The lender should cover the eligible credit facilities as soon as they are sanctioned. Guarantee will commence from the date of payment of guarantee fee.