Delhi Launches Collateral-Free Loan Scheme for Small Entrepreneurs

The Delhi Government has unveiled a new loan scheme to help small business owners get easier access to credit without pledging any collateral. The announcement was made by Chief Minister Rekha Gupta during an official event in the city.

Under this initiative, small entrepreneurs in New Delhi can apply for business loans of up to ₹10 crore without having to mortgage property or other assets—a major hurdle that often stops small business owners from getting funding.

The scheme is being launched through a partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This trust acts as a guarantee provider: if a borrower defaults on a loan, the CGTMSE steps in to cover most of the loss.

How the Guarantee Works

To encourage banks to lend more freely:

• CGTMSE will provide approximately 75–90% guarantee coverage on loans, depending on the type of borrower and business.
• The Delhi Government will cover the rest, so that up to 95% of the loan value is backed by government guarantee.
• This means banks’ actual risk is very small—only about 5% of the loan amount. 

Because banks are protected, they are more likely to approve loans quickly and with fewer conditions or documentation than traditional loans.

Who Will Benefit?

The scheme is meant to help a wide range of sectors across the city, including:

• Manufacturing units
• Services businesses
• Retail outlets
• Education and skill-development ventures

There’s a special focus on women entrepreneurs, who often face more difficulty accessing credit.

Fund Size and Potential Impact

An initial ₹50 crore fund has been set aside to support this programme. While that is the amount available in the pool today, it’s expected that banks could extend many times this value in actual loans because of the guarantee coverage. Officials say this could help unlock credit worth ₹2,500 crore or more for small businesses.

There is also an NPA (non-performing assets) ceiling of 10%, which limits how much bad debt the government will absorb, ensuring some fiscal discipline in the programme.

Why This Matters

For decades, small entrepreneurs in Delhi have struggled to get loans because banks require collateral—usually property or assets—that many small business owners do not have. By removing this barrier and sharing the risk with CGTMSE and the Delhi Government, the new scheme aims to expand credit access and support job creation and innovation across the city.

“Small entrepreneurs often struggle to obtain loans,” said Chief Minister Gupta, adding that this initiative will give them the resources and confidence they need to grow.