CGC loan is a common topic among SME/SMI enterpreneurs. What exactly is CGC loan? In actual fact, CGC do not provide loan to borrowers. CGC only provide guarantee to banks for bank facility granted to borrowers.
Generally CGC loans can be categorized into following groups :
1. DAGS (direct access guarantee scheme) - subject to guarantee fee about 3% p.a. on loan amount (refer to start-up company for further detail)
2. Non-DAGS (any other schemes do not fall under DAGS)
Borrowers are required to submit application to banks and banks will seek CGC's approval after approving an application. Among the more popular schemes under this group include :
- SAGS - no guarantee fee imposed
- Credit Enhancer - subject to guarantee fee about 3% on guarantee amount
- Flexi Guarantee Scheme - subject to guarantee fee about 1.5% on guarantee amount
For loans approved under this group, it is the bank's discretion to park the loan under one of above schemes. It is also the bank's discretion to impose security requirement and interest rate.
Different scheme may have different approving criteria. Sometime a loan rejected under one scheme can be approved under different schemes. For eg. Credit Enhancer scheme has some restrictions on certain industries but not SAGS.
