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What Is Emergency Credit Line Guarantee Scheme (ECLGS) For MSMEs? How To Apply For ECLGS? Scheme Eligibility & Its Features

ECLGS Scheme - Emergency Credit Line Guarantee Scheme for MSMEs

The COVID-19 pandemic has trembled all financial industries. SMEs are highly affected by this pandemic. However, the Government of India has taken a sensational decision to help MSMEs in the Emergency Credit Line Guarantee Scheme or ECLGS.

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ECLGS scheme was presented by the Indian Finance Ministry and the Financial Services department on February 29, 2020. This scheme helps MSMEs to afford daily business expenses and other aspects of finances. It’s known that this scheme was a part of the massive economic packages of Rs. 20,00,000 crore.

In a nutshell, Emergency Credit Line Guarantee Scheme is a boon for MSMEs struggling to meet both ends. The scheme helps micro to medium businesses afford daily expenses and helps them achieve particular cash flow and a healthy income.

In this article, you’ll discover more about the scheme’s eligibility requirements, the application process, features, credit limit, interest rate, the validity of the scheme, and many more. So, keep reading.

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What is Emergency Credit Line Guarantee Scheme?

As the scheme’s name suggests, Emergency Credit Line Guarantee Scheme or ECLGS is one of the best-guaranteed credit schemes in an emergency for which the Government provides 100% guarantee coverage. The scheme encourages MSMEs to fulfill their dreams and desires.

Usually, the Emergency Credit Line Guarantee Scheme is amiable to MSMEs who apply for loans up to Rs. 3,00,000 crores under “Guaranteed Emergency Credit Line” between May 23, 2020, to October 31, 2020.

Guaranteed Emergency Credit Line is the pseudonym given for the credit product of this scheme. However, the ECLGS scheme has been extended to September 30, 2021, to support MSMEs due to the Covid-19 pandemic.

Following are the Emergency Credit Line Guarantee Scheme types –

  1. Emergency Credit Line Guarantee Scheme 1.0
  2. Emergency Credit Line Guarantee Scheme 2.0
  3. Emergency Credit Line Guarantee Scheme 3.0
  4. Emergency Credit Line Guarantee Scheme 4.0

1. Emergency Credit Line Guarantee Scheme 1.0

This scheme offers full guarantee credit for the businesses whose credit line goes up to Rs. 50 crore as of February 29, 2020. The scheme is provided to the firms that outshine all other companies regarding credit loan applications.

2. Emergency Credit Line Guarantee Scheme 2.0

Unlike Emergency Credit Line Guarantee Scheme 1.0, this scheme is diversified to 26 other sectors that the Kamath Committee recognized as of September 4, 2020. This scheme is primarily available for businesses that are outstanding in terms of funds only. Usually, the candidate has to apply for funds over Rs. 50 crore and less than Rs. 500 crore.

3. Emergency Credit Line Guarantee Scheme 3.0

This is the final extended part of the Emergency Credit Line Guarantee Scheme, Emergency Credit Line Guarantee Scheme 3.0. In this scheme, the sectors included are hospitality, tourism and travel, and sports. This scheme is highly beneficial for businesses who are looking for credit above Rs. 500 crore.

The primary purpose of this scheme is to offer complete guarantee coverage for the credit line up to 20% of the available loan by February 20, 2020, in the Covid crisis. The percentage varies from sector to sector. For instance, the 100% guarantee coverage for the Hospitality, Travel & Tourism, and sports sectors are up to 40%.

4. Emergency Credit Line Guarantee Scheme 4.0

In order to support Covid-hit MSMEs further, the Govt of India has announced a three-month extension of Rs 3 lakh crore Emergency Credit Line Guarantee Scheme to September 30, 2021, from June 30, 2021, or till guarantees for an amount of Rs 3 lakh crore are issued under the fourth revision of the scheme dubbed ECLGS 4.0.

For most sectors, the scheme loans are given under the extended schemes (ECLGS 1.0, ECLGS 2.0, ECLGS 3.0, ECLGS 4.0) by reliable banks and financial authorities.

Features of Emergency Credit Line Guarantee Scheme (ECLGS)

Here’s a list of features of the Emergency Credit Line Guarantee Scheme or ECLGS that you shouldn’t miss out on.

  • ECLGS is a term loan whose application validity date is October 31, 2020. This means the businesses who had applied for the loans under the Guaranteed Emergency Credit Line will only avail of the scheme loans.
  • As informed by the Indian Government, the maximum amount of credit available for the Emergency Credit Line Guarantee Scheme is Rs. 3,00,000 crores.
  • The Indian Government announced that the primary reason to present the scheme is to help micro and small businesses to sustain themselves financially in this pandemic era.
  • ECLGS scheme was presented by the National Credit Guarantee Trust Company Ltd or simply NCGTC.
  • ECLGS scheme tenure is of 4 years or 48 months. In the first year, the business has to pay only an interest amount. Yet, in the following years, the companies are requested to pay both interests and the principal amount.
  • There are a few eligibility requirements to avail of the Emergency Credit Line Guarantee Scheme. We’ll discuss this more in the later sections.
  • ECLGS scheme is provided for the MSMEs, small companies, trusts, registered companies, and the individuals who set up various businesses.

How to Apply for Emergency Credit Line Guarantee Scheme (ECLGS)

You can avail of the ECLGS scheme from any lending institutions such as commercial banks, financial institutions, and non-banking financial companies. The scheme is available for the existing users who are pre-authorized and not the new users who are signing up now. For more information visit the ECLGS website here.

To apply for the Guaranteed Emergency Credit Line, you need to check its eligibility requirements as mentioned here.

Eligibility for Emergency Credit Line Guarantee Scheme

The eligibility requirements for the application process are as mentioned below.

  • The borrower should compulsorily be a member of the GST or Goods and Services Tax registrar. These are the main criteria that need to be fulfilled before applying for the Emergency Credit Line Guarantee Scheme.
  • The candidates with SMA 2 or NPA aren’t eligible to avail of this scheme. Though there are no added eligibility requirements, these are the two primary factors to consider for scheme availability.
  • The Majority of the scheme plans are offered to businesses with partnerships, registered companies, trusts, and other authorized small companies.
  • There are fewer chances of getting loans for businesses run solely by individuals.
  • Due to February 29, 2020, the candidate’s accounts should be at least 60 days older.

These are the few things to consider while applying for the Emergency Credit Line Guarantee Scheme. The ECLGS loan will be sanctioned only if the borrowers meet all the requirements.

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Additional Details of Emergency Credit Line Guarantee Scheme

This section will discuss the ECLGS scheme’s additional details, such as interest rate, guarantee, credit limit, repayment, and ECLGS scheme validity.

Credit Limit:

As discussed earlier, the credit limit would be 20% for the businesses. At the same time, it’s extended up to 40% for the hospitality, travel & tourism, leisure & sports sectors.

Interest Rate:

The maximum annual interest rate is around 14%.

Government Guarantee:

The Government guarantee coverage is 100% under this scheme for a given credit limit.


  • The amount has to be paid within four years or 48 months. Usually, in the first year, only interest has to be paid. In the next three years, the borrowers should pay both interest and principal amounts to the banks they borrowed the credit from.
  • The net amount is paid to the lending institutions in equal installments by the borrowers for 36 months, i.e., three years.

Scheme Validity:

The ECLGS scheme has been extended to September 30, 2021, or till guarantees for an amount of Rs.3 lakh crore are issued. Disbursement under the scheme is permitted up to December 31, 2021, as per the press release by the Ministry of Finance.

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