CGTMSE Fee Calculator
A collateral-free loan is not a free loan. The guarantee fee sits on top of your interest rate, and the combination is what you should be comparing against a secured offer. This works out both, and prices what keeping your property unencumbered actually costs you.
Your facility
You do not choose the risk tier. CGTMSE assigns it to your bank based on its portfolio performance, and your bank decides whether to pass the cost on to you at all. Ask which tier applies before you sign.
That is your 13% bank rate plus 0.33% of guarantee fee. Over 5 years you pay Rs.10,95,553 in interest and Rs.49,611 in guarantee fee.
A secured loan at 9.5% would cost Rs.7,80,335 in total. Not pledging collateral is costing you Rs.3,64,829 across the life of this loan. Whether that is worth it depends on what the collateral is and what else you might need it for.
Guarantee fee, year by year
Year one is charged on the guaranteed amount. From year two the fee follows your outstanding balance down, so it falls every year as you repay.
Total guarantee fee over the loan: Rs.49,611
KarobarUdhar Insider Tip
The guarantee fee is a cost of not pledging collateral, and it is often worth paying, but it is rarely presented that way. Ask your lender directly for two quotes: one CGTMSE-backed and one secured against whatever you could pledge. The rate difference plus the guarantee fee is the true price of keeping your property free, and on this loan that price is Rs.3,64,829. Compare it against what having that property unencumbered is worth to you over the same period.
KarobarUdhar Insider Tip
The guarantee protects the lender, not you. If the loan defaults, CGTMSE pays the bank a share of the amount in default and then has recourse to recover from the borrower. Owners routinely assume the guarantee cancels their liability. It does not. Your repayment obligation is unchanged, and the fee you are paying buys the bank's comfort, which is what allows the loan to be made without security.
Indicative only. Fee slabs follow the AGF structure revised effective 1 April 2025 under CGTMSE Circular No. 251/2024-25 dated 18 March 2025, applicable to guarantees approved or renewed on or after that date. Your actual rate depends on your lender's CGTMSE risk classification, which the borrower does not control, and on whether the lender passes the cost on. This calculator uses the guaranteed amount in year one and the outstanding loan balance in subsequent years as the fee basis. Coverage percentages apply to the amount in default, not to the sanctioned loan. Check that basis against your sanction letter and confirm all figures with your member lending institution.
The comparison nobody puts in front of you
When a business is offered a CGTMSE-backed loan, the conversation is usually framed as access. You have no collateral, the scheme lets the bank lend anyway, and the guarantee fee is mentioned briefly if at all. What is rarely laid out is that the same lender would very likely offer a lower rate against security, and that the gap between the two, plus the fee, is a number you could put in rupees.
Sometimes that number is worth paying without hesitation. A business whose only property is the family home has a strong reason not to pledge it, and the fee is the price of that protection. Sometimes it is not, and an owner who had a spare commercial unit sitting idle has paid several lakh over five years for nothing.
The point is to make the choice knowingly. The fee also falls every year, because from year two it is charged on your outstanding balance rather than the original guarantee, and that pattern is worth seeing before you assume the first year figure repeats.
How to use it
- Enter the loan amount and tenure. The fee slab is set by loan size, so the amount matters more than anything else you enter.
- Select your enterprise size and any concession. Micro units and women, SC or ST entrepreneurs and units in notified regions attract different coverage and, in some cases, a fee concession.
- Ask your bank for its CGTMSE risk tier. This is not something you can look up. Your lender knows it, and it changes your fee. If you have not asked, leave it at standard.
- Enter the rate you would get with collateral. This is the comparison that matters. The difference between the two, plus the guarantee fee, is the price of keeping your property free.
Common questions
How is the CGTMSE annual guarantee fee calculated?
The fee is a percentage of the guaranteed amount in the first year and of the outstanding balance in later years, so it falls as you repay. The percentage depends on your loan size slab, your lender’s CGTMSE risk classification, and any concession you qualify for. The structure in use was revised effective 1 April 2025 under CGTMSE Circular No. 251/2024-25 dated 18 March 2025, applying to guarantees approved or renewed on or after that date.
Who pays the guarantee fee, the bank or the borrower?
The member lending institution pays it to the CGTMSE trust, and the scheme leaves it to the lender to decide whether to pass the cost on to the borrower. Most do. Ask before you sign, because it is not always shown separately in the sanction letter.
Does the guarantee mean I do not have to repay if the business fails?
No, and this is the most damaging misunderstanding about the scheme. The guarantee protects the lender. If the loan defaults, the trust pays the bank a share of the amount in default and then has recourse to recover from the borrower. Your repayment obligation is entirely unchanged.
Why does my bank charge a higher fee than another bank?
CGTMSE assigns each member lending institution a risk category based on its own portfolio performance. Better-performing institutions receive a discount on the standard rate and higher-risk ones attract a premium. The borrower has no control over this, which is a legitimate reason to ask two lenders for the same CGTMSE-backed quote and compare.
Is a CGTMSE loan cheaper than pledging property?
Almost never on pure cost. A secured loan carries a lower interest rate and no guarantee fee. What CGTMSE buys is access when you have no collateral, and the freedom to keep property unencumbered when you do. The calculator above prices that trade so you can decide rather than assume.