I am a first generation entrepreneur. I have availed a collateral free loan for my MSME unit .So I can share with you my experience of availing a collateral free loan from a Bank.

If you are a first generation entrepreneur like me its really very difficult to get the required amount of credit from banks for starting a new MSME industrial unit .The banks generally demand collateral for the loans and advances to customers.

So how can a new aspiring entrepreneur realise his dream of setting up a enterprise of their own , if he cant get loan without collateral.

There are basically three factors of production that is land labour and capital.When a young entrepreneur is interested in starting a new enterprise usually he can manage one of the most important element of production which is labour.

The other two elements of production which is land and capital is difficult to manage. Land may also be manageable on rent or lease basis ,but capital required is vey difficult to acquire by a first generation entrepreneurs.

Therefore the government of India has launched a scheme called the CGTMSE scheme under which a MSME unit which is registered under the udyam registration can obtain a loan of upto 2 crore without any collateral requirements by banks .

This scheme is operated with the help of SIDBI (small industries development bank of India) through the CGTMSE .

Its full form is Credit guarantee trust from medium and small enterprise.A certain amount of funds is allotted by the government in this fund to compensate the banks who lends to a eligible MSME unit.

There are many schemes under which a entrepreneur in India can obtain a collateral free loan.

Some of the major collateral free loan schemes of the government of India are such as Pradhan Mantri Mudra yojna etc

Usually the banks will not be interested to advance loan to a new entrepreneur without any security.I am not saying they never give loan to a entrepreneur without security.I am simply saying that they prefer to take atleast some percentage of security for the loan they give just to ensure their repayments.

In my early days when i used to approach a bank for laon they simply used to ask me just one question ‘What security or collateral you could offer to us”.

In my early days i was really harassed by the non cooperative nature of bank managers.At that time the situation was not good.Now its better.

When I applied to banks they simply asked me onequestion ,”what security you could offer to us”?

I simply used to reply them honestly and politely that i dont have anything to offer as a security and would like to avail a loan under the cover of CGTMSE.

So you may also face some problems initially in getting a collateral free loan for your business like me in my early days.But you can overcome this difficulty by your conviction to your work and buisness misssion.

The banks will definetely lend you loan and support you if you have a litte experience in your business field and you have a good business plan.

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