In a major boost for small businesses, start-ups, and traders, the Delhi government on Tuesday signed a Memorandum of Understanding (MoU) with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to expand access to collateral-free loans of up to Rs10 crore for entrepreneurs operating in the capital.
The initiative is aimed at removing one of the biggest hurdles faced by small business owners — the requirement of property or asset security to obtain bank loans. Under the new arrangement, thousands of entrepreneurs who earlier failed to secure formal credit due to lack of collateral will now be able to access institutional funding more easily.
Chief Minister Rekha Gupta described the agreement as a key step towards financial empowerment and inclusive growth, aligned with the vision of building a “Viksit Delhi”. She said the move would encourage entrepreneurship, generate employment, and strengthen the city’s small business ecosystem.
Rs50 Crore Fund to Unlock Rs 2,500 Crore in Loans
To implement the scheme, the Delhi government has earmarked Rs 50 crore as guarantee support. This fund is expected to unlock loans worth nearly Rs 2,500 crore for eligible micro and small enterprises across the city.
Under the guarantee mechanism, CGTMSE will cover 75 to 90 per cent of the loan amount, depending on the category of the borrower. The remaining risk will be borne by the Delhi government, ensuring banks and financial institutions can lend without demanding collateral from borrowers.
Officials said this risk-sharing model would encourage banks to extend more credit to first-time entrepreneurs and small traders, especially those operating in informal sectors.
One Lakh Entrepreneurs Targeted in First Phase
There is no fixed cap on the number of beneficiaries under the scheme. However, the government has set an initial target of supporting at least one lakh entrepreneurs during the first year of implementation.
The scheme will be open to businesses in manufacturing, services, retail trade, and allied sectors. Special relief provisions have been included for women entrepreneurs and entrepreneurs from Scheduled Caste (SC) communities, with higher guarantee coverage and simplified procedures.
Officials said priority would be given to start-ups, micro enterprises, and youth-led ventures to promote self-employment and innovation in the city.
Strengthening Delhi’s Start-up and MSME Ecosystem
Experts believe the MoU could significantly improve access to formal credit for Delhi’s small business community, which often depends on informal lenders due to the lack of bankable collateral.
“With this scheme, Delhi is sending a strong message that capital should not become a barrier to entrepreneurship. This will help unlock new business ideas, expand existing enterprises, and create thousands of jobs,” an official said.
The initiative is also expected to strengthen Delhi’s position as a major start-up and MSME hub, particularly in sectors such as manufacturing, services, retail trade, and technology-driven enterprises.
As implementation begins in the coming weeks, banks and financial institutions are expected to roll out loan products under the new guarantee framework, making collateral-free credit more accessible across the capital.
