Credit Guarantee Fund Scheme for Factoring (CGFSF)

Ministry of Micro, Small and Medium Enterprises (MSME)

The Credit Guarantee Fund Scheme for Factoring provides credit guarantee support for eligible factoring transactions, helping MSMEs access finance against their receivables.

Eligibility Criteria

Must be a Micro or Small Enterprise (MSE) under the MSMED Act, 2006
Engaged in: Manufacturing, Services, Trading
Facility Requirements:
Must avail factoring facility (receivables financing) – Includes recourse and non-recourse factoring
Facility must be collateral-free
Must not be covered under any other government guarantee/insurance scheme
Lender Requirement:
Financing must be through: Scheduled Commercial Banks, NBFCs, Registered Member Lending Institutions (MLIs)
Compliance Conditions:
Borrower must not be a defaulter
Loan account must not be classified as NPA

Benefits

Credit Guarantee Support:
Up to 90% guarantee coverage on default amount
Remaining 10% risk borne by lender/factor
Financial Advantages:
Enables collateral-free invoice financing
Improves working capital and cash flow
Facilitates faster credit approval
Business Impact:
Reduces risk for lenders
Enhances credit access for MSMEs
Supports business growth and liquidity management

How to Apply

Must be a registered MSME
Approach: Banks, NBFC-Factors, Other registered MLIs
Apply for factoring facility
Lender: Evaluates application, submits proposal under CGFF via NCGTC portal
Guarantee coverage activated upon approval
Cost:
Guarantee fee: 0.10% per month (with recourse), 0.12% per month (without recourse)