Collateral Guarantee Support for MSME Exporters in India

Do Export Loans Continue to be Difficult for Your Business Due to Lack of Collateral?

Lack of sufficient collateral or inability to obtain third-party guarantees is one reason why many small business owners are unable to obtain export working capital. As a result of their inability to access export financing, these businesses miss out on the opportunity to grow as quickly as possible; they also miss potential export opportunities and they may be limited from entering the global market.

The Collateral Guarantee Support Program was created to alleviate some of this burden by providing lenders with a government-backed credit guarantee to reduce the risk associated with lending. The result is a lessened amount of difficulty in obtaining export funding.

What is Collateral Guarantee Support Scheme?

Collateral guarantee support is an export promotion (EP) backed government program that will provide credit guarantee cover to banks & financial institutions for export-linked loans.

In this way, instead of the exporter having to provide full collateral in order to obtain a loan, the government will share the risk with the lender so that MSMEs can get working capital at reduced collateral requirements and a better chance of getting a loan approved.

What is the Actual Benefit for Exporters?

The scheme significantly improves loan accessibility by reducing the risk exposure of banks.

Example:

• Loan Amount: ₹1 Crore
• Government Guarantee: ₹75–85 Lakhs
• Result: Reduced bank risk and higher chances of loan approval

This enables exporters to secure funding even with limited collateral, supporting business expansion and export growth.

Who is Eligible?

• MSME exporters (both manufacturer and merchant exporters)
• Valid Importer Exporter Code (IEC)
• Valid Udyam Registration
• Exports under eligible 6-digit HSN tariff lines
• Loan availed from approved Member Lending Institutions (MLIs)

Documents Required

• IEC Certificate
• Udyam Registration Certificate
• Bank loan application or sanction letter
• Export invoices or confirmed purchase orders
• Financial statements (as required by lender)
• UIN (Unique Identification Number) from DGFT

How to Claim Collateral Guarantee Support

1. Apply on the DGFT portal and generate UIN
2. Approach a bank or approved lending institution
3. Share UIN before loan disbursement
4. Bank applies for guarantee coverage under CGTMSE
5. Loan is sanctioned with reduced collateral requirement

The guarantee is extended to the lender, but the benefit is passed on to the exporter through easier loan approval.

Important Conditions to Know

• Up to 85% guarantee coverage for Micro and Small enterprises
• Up to 65% coverage for Medium enterprises
• Maximum guarantee limit: ₹10 crore per exporter (per financial year)
• Applicable only for export-linked working capital loans
• Only valid for notified HSN tariff lines
• Exporter remains fully responsible for loan repayment

When You Are Not Eligible

• UIN not generated or submitted before loan disbursement
• Non-MSME exporters
• Loan not linked to export activity
• Export products outside eligible HSN list
• Loan availed from non-approved banks or institutions

How Afleo Helps You

• Complete eligibility assessment
• UIN generation and DGFT compliance support
• Coordination with banks and MLIs
• Documentation and application support
• Credit structuring to maximize guarantee coverage
• End-to-end assistance until loan disbursement

Avoid rejections and delays with expert guidance.

Speak to Export Incentive Expert

Why This Scheme is Important for Exporters

One of the largest hurdles for MSME exporters to overcome is accessing working capital. The benefit of this scheme will be to reduce dependency on collateral by providing greater access to finance for exporters and enabling them to increase their exports without being constrained by a lack of liquidity.

This is particularly important for new and emerging Exporters wishing to enter global markets.