Emergency Credit Line Guarantee Scheme

The Emergency Credit Line Guarantee Scheme (ECLGS) was introduced by the Indian Government to provide financial assistance to businesses, particularly micro, small, and medium enterprises (MSMEs). It was introduced in May 2020 by the government to mitigate the losses incurred by MSMEs due to the Covid-19 pandemic.

The ECLGs scheme provides 100% guarantee cover for additional working capital term loan (for banks and financial institutions) and additional term loan (for NBFCs) of up to 20% of their outstanding credit up to 25 crores which is 5 crore.

Category Total Credit Outstanding Days Past Due
ECLGS 1.0 Up to ₹ 50 Crore Up to 60 days
ECLGS 2.0 Above ₹50 Crore, less than ₹500 Crore. Up to 60 days
ECLGS 3.0 - Up to 60 days
ECLGS 4.0 For assistance of up to ₹2 Crore. Up to 90 days

Interest Rates For ECLGS

The emergency credit line guarantee scheme is a pivotal initiative that offers financial support with a government-backed credit guarantee. The scheme is designed to alleviate liquidity constraints and stimulate economic recovery through low interest loans. The interest rate for ECLGS loans are capped at 9.25% for banks and financial institutions and 14% for NBFCs. This ensures that businesses have access to affordable credit.

This table below shows the capped interest rates:

Banks/ Financial Institutions 9.25%
NBFCs 14%

Eligibility Criteria for ECLGS

The guaranteed emergency credit line has eligibility requirements that ensures targeted and effective support to businesses in need. These criteria help to determine the deserving businesses or MSMEs get collateral free credit that is government guaranteed. These criteria are:

All MSMEs or business enterprises with outstanding loans totaling up to 500 crore as on 29th February 2020 with an annual turnover of 250 crore in the previous year (2019-2020).

The borrower’s loan account should be less than 60 days past due as on 29th February 2020.

Borrower’s classified as NPA or SMA 2 by lenders as on 29th February 2020 shall not be eligible for the loan.

Businesses who are in the books of the Member Lending Institution (MLI) are eligible.

Eligible borrowers should constitute MSMEs and business enterprises who fall under the category of proprietorship, partnership, registered company, trusts, and limited liability partnerships are eligible for the scheme.

Borrowers should include loans taken under Pradhan Mantri Mudra Yojana extended on or before 29th February 2020.

The businesses and MSMEs must have GST registration.

Also looking for a Mudra Loan or MSME Loan? Check complete details from the linked page.

Looking for a Business Loan? Apply now!

Comparing ECLGS with Other Business Loan Options

There are also other business loan options that businesses can choose from. Making a comparison can help you find the best scheme that suits your specific business requirements.

Emergency Credit Line Guarantee Scheme:

Focus: Businesses especially MSMEs facing economic difficulties due to COVID-19.

Collateral: No collateral required.

Government guarantee: Government-backed credit guarantee.

Eligibility: Business having outstanding loans of up to ₹500 Crore with ₹250 Crore turnover.

Purpose: Working capital and operational needs.


Focus: Micro-enterprises

Collateral: Often no collateral for smaller loans.

Government guarantee: No government guarantee.

Eligibility: Micro-enterprises in various sectors.

Purpose: Business expansion and working capital.

CTGMSE Scheme:

Focus: Micro and small enterprises.

Collateral: Collateral free loans up to a certain amount.

Government guarantee: Credit guarantee up to a certain percentage.

Eligibility: Micro and small enterprises.

Purpose: Business expansion and working capital.

Stand-Up India:

Focus: Women, SC/ST, and backward class entrepreneurs.

Collateral: Varies on different loans and purpose for the loan.

Government guarantee: No specific guarantee

Eligibility: SC/ST/ Women

Purpose: Financing greenfield enterprises.

PSB Loan in 59 Minutes:

Focus: MSMEs

Collateral: No collateral required.

Government guarantee: No guarantee

Eligibility: MSMEs

Purpose: Business expansion and working capital.

Startup India:

Focus: Startups

Collateral: May involve collateral

Government guarantee: No guarantee

Eligibility: Registered startups

Purpose: To help fund startups

Benefits & Features of ECLGS for Businesses

The GECL offers many features and benefits that gives a strategic framework to empower businesses, especially MSMEs. These features and benefits provide liquidity, foster growth and strengthen the financial foundations of businesses trying to navigate through the pandemic times.

Collateral-free loans: No collateral is required for the ECLGS scheme, making it easier for businesses and MSME to get the financial support they need.

Government guarantee: The scheme is government backed, providing confidence to lenders to offer loans to eligible businesses.

Sector specific caps: Different sectors have specified caps on the maximum loan amount. This has helped to tailor the support according to the unique needs of each industry.

Loan amount: The loan amount is determined based on the businesses or MSME loan outstanding dues and annual turnover.

Fund utilisation: The loan can be used for various purposes such as for meeting the operational costs and addressing working capital requirements that are essential for business operations.

Quick disbursement: The scheme offers quick processing and swift disbursement to ensure that MSMEs and businesses receive timely financial aid.

Repayment tenure: The repayment is set at 4 years. Whereby, the moratorium period will be for 12 months. The moratorium period can also be extended for up to 2 years for ECLGS 1.0, ECLGS 2.0 and ECLGS 3.0.

How To Apply for ECLGS?

The emergency credit line guarantee scheme can be applied from all authorised banks, financial institutions or NBFCs. These different lenders will each have a different application procedure, however, the general guideline on the GECL application is that the scheme is pre-approved for eligible businesses and MSMEs. An MLI will then send the offer letter to the eligible borrowers which they may choose to accept or reject. If the business or MSME accepts the loan, then they will need to provide the required documents. An ‘Opt-out’ option is also available for the scheme.

For businesses and MSMEs who wish to apply, they can contact their lenders for more accurate information.

Looking for a Business Loan? Apply now!

Frequently Asked Questions

The Emergency Credit Line Guarantee Scheme is a government initiative to provide financial aid to businesses, especially MSMEs, impacted by COVID-19.

The ECLGS offers government backed credit security to lenders, encouraging them to provide credit.

All MSMEs and businesses under the proprietorship, partnership, registered company, trusts, and limited liability partnerships with GST registration are eligible. They must have an outstanding loan of up to 500 Crore, with an annual turnover of 250 Crore, and a loan account having less than 60 days past due.

A business can avail a maximum of 20% from their outstanding credit.

No, there is no collateral required for ECLGS.

The interest rate on ECLGS loans for banks and financial institutions is capped at 9.25%. While the rate of interest for NBFCs is capped at 14%.

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