Every SME is looking for unsecured funding to help seed, restructure or grow their business – especially in a tight economy like today. One of the true unsung heroes of the American dream story for entrepreneurs before this current recession was the role that the Small Business Administration (SBA) played in helping small businesses get funding to grow their businesses. Microsoft, HP and Nike were all early beneficiaries of SBA loans and look where they wound up. This US Federal Government Agency underwrites a loan though a bank so that 85% of the risk is covered. This allows businesses with little or no collateral and assets to secure sizable unsecured loans from a participating bank that under normal circumstances would immediately say no. The good news is that India has its own SBA – its called the CGTMSE – and for some bizarre reason it is one of the best kept secrets around.

Welcome to the Credit Guarantee Fund Trust for Micro and Small Enterprises. Small Indian businesses with feasible business plans but little collateral can get up to Rs 50 Lacs in funding without any security and with the government underwriting 75% of the risk. You will hardly find a bank promoting this actively as the scheme requires time and effort and the bank makes less money on the transaction. But entrepreneurs should know about it as the cost is cheaper and the risk is less. For a one-time fee of 2%, businesses can secure up to Rs 50 lacs with no collateral and no large deposits.

So what do you do now – well first find a partner bank – see the list and all related information at the CGTMSE Web Site or call 022-2564 1803/4/5 – and then go see them, discuss the scheme and push them to process the application. You never know….