Collateral-free boost for Delhi businesses

January 28, 2026 Hot from the Oven Valli Sarvani

Access to affordable credit remains a key driver of entrepreneurship and local economic growth across major cities.

The Delhi government has launched a major credit support initiative for small businesses. It signed an MoU with the Credit Guarantee Fund Trust for Micro and Small Enterprises.

The agreement enables collateral-free loans of up to ₹10 crore. Chief Minister Rekha Gupta attended the signing at the Delhi Secretariat.

The move targets entrepreneurs struggling with early-stage financing. As a result, more startups can now enter the formal economy.

Earlier, many young founders failed to secure bank loans due to a lack of collateral.

However, the new Delhi Credit Guarantee Scheme changes this structure. Under the scheme, CGTMSE will guarantee 75 to 90 per cent of each loan.

Meanwhile, the Delhi government will guarantee another 5 to 20 per cent. Therefore, banks face only a 5 per cent exposure. This sharp risk reduction encourages higher loan approvals.

Moreover, the scheme supports enterprises across multiple sectors. These include manufacturing, services, retail, education, and training institutes.

The government has created a dedicated fund of ₹50 crore. Consequently, banks can disburse loans worth up to ₹2,500 crore. Officials also clarified that the fund size can expand when required.

Importantly, the model allows strong financial leverage. An investment of ₹2 crore can unlock loans of up to ₹100 crore. Meanwhile, a 10 per cent NPA cap safeguards public finances.

This limit ensures fiscal discipline while supporting growth. Initially, the government aims to support one lakh beneficiaries. However, no upper limit exists on future coverage.

Any eligible small business owner in Delhi can access this facility. The loans will carry a formal government-backed guarantee.

As a result, paperwork and approval timelines should be reduced. Additionally, the scheme prioritises women entrepreneurs through special assistance. This focus promotes inclusive business participation.

Chief Minister Gupta emphasised employment generation as a key outcome. As businesses expand, they will create new local jobs.

Therefore, the scheme supports both entrepreneurship and workforce growth. Overall, the initiative signals a strong policy push for Delhi’s small business ecosystem.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on March 08, 2017