In a major step to strengthen the small business ecosystem, the Delhi government on Tuesday signed a memorandum of understanding (MoU) with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). The agreement allows collateral-free loans of up to ₹10 crore for new and existing micro and small enterprises (MSEs).
The signing took place at the Delhi Secretariat in the presence of Chief Minister Rekha Gupta. She described the initiative as a “major boost” for entrepreneurs, especially women-led businesses and start-ups.
Easier access to credit for small enterprises
Small businesses often struggle to secure loans due to the lack of assets to offer as collateral. Because of this, many promising ventures fail to grow beyond the early stage. The new scheme aims to remove that barrier.
Under the agreement, eligible MSEs can apply for loans without pledging property or other assets. As a result, entrepreneurs will find it easier to raise funds for expansion, technology upgrades, and working capital needs.
Shared guarantee reduces risk for banks
Under the Delhi Credit Guarantee Scheme, the loan guarantee will be jointly shared by the Delhi government and CGTMSE. CGTMSE is a Central government body that works under the Ministry of Micro, Small and Medium Enterprises.
Because the risk is shared, banks and financial institutions are more likely to lend to small businesses. Officials said this structure builds confidence among lenders while protecting public funds.
₹50-crore fund to strengthen the scheme
In addition, the Delhi government has set up a dedicated ₹50-crore fund to support the programme. The fund will help cover guarantee-related costs and encourage wider participation from banks.
According to officials, the fund will also ensure that credit continues to flow even during economic slowdowns. Therefore, small businesses will have more stability and predictable access to finance.
Special push for women-led businesses
Meanwhile, Chief Minister Rekha Gupta highlighted the importance of supporting women entrepreneurs. She noted that women often face more hurdles than men when seeking formal credit.
By removing the need for collateral, the government hopes to level the playing field. The scheme will encourage more women to start businesses and scale existing ventures.
Support for start-ups and first-time entrepreneurs
The initiative will also benefit first-time entrepreneurs, who usually lack a financial track record. In many cases, banks hesitate to lend to such borrowers.
Through this scheme, the government aims to back innovative ideas and early-stage enterprises. Officials believe this will help create jobs and boost innovation in the capital.
Impact on Delhi’s economy
Overall, the scheme is expected to improve ease of doing business in Delhi. It will support job creation, increase local production, and strengthen supply chains.
At the same time, officials said the initiative aligns with the broader goal of making Delhi a hub for MSMEs and start-ups.
Implementation and next steps
The government will roll out the scheme through participating banks and financial institutions in coordination with CGTMSE. Detailed guidelines on eligibility and application procedures are expected soon.
Once implemented, the programme could benefit thousands of small businesses across sectors such as manufacturing, services, and retail.