From 28 lenders and roughly ₹23 lakh a month, down to one consolidated facility — a Credit Core Finance debt-restructuring case study. Client identity withheld for confidentiality.
A sugar-and-allied-goods distributor in Pune was sending close to ₹23 lakh out the door every month just to keep its loans current. The business underneath was healthy: turnover near ₹40 crore on the latest provisional financials, consistently profitable, with a clean promoter bureau record. What had broken was the shape of the borrowing, not the borrowing itself.
By the time the file reached our desk, the firm was carrying about ₹10.58 crore of debt across nearly 30 separate loan accounts spread over 28 different lenders. Most of that account count came from unsecured business loans stacked one after another from NBFCs and fintech lenders — each with its own EMI, its own short tenor, and a rate running well into the high teens. A profitable company was being slowly starved by the structure of its own liabilities.
This is how we rebuilt it around a single CGTMSE-backed hybrid facility, and why that structure suited a borrower who, read at a glance, looked too over-borrowed to win a fresh sanction.
Case snapshot
- Sector | Sugar & allied goods — distribution / trading
- Location | Pune, Maharashtra
- Engagement | MSME debt restructuring + fresh working-capital sanction
- Starting debt | ₹10.58 Cr across ~30 accounts and 28 lenders
- Facility arranged | ₹5 Cr CGTMSE hybrid overdraft (½ CGTMSE-guaranteed + ½ collateral-backed) at 8.75%
- Unsecured book cleared | 21 NBFC / fintech business loans — ₹3.94 Cr, closed in full
- Monthly debt servicing | ₹23 L → ₹8 L
- Cash freed | ~₹15 L per month · ~₹1.8 Cr a year
- CCF Score | 78 / 100 — BANKABLE
- Folio | CCF/CS/2026/003
The diagnosis: a sound business, a broken liability side
Run through our internal appraisal, the firm scored *78 out of 100* on the CCF Score — a clear BANKABLE verdict, with one band dragging visibly.
- Bureau — strong. Clean promoter record, no overdues. –
- Banking conduct — 14/20.
- The weak band, and the whole reason the file looked stressed.
- Leverage & ratios — inside private-lender comfort, with TOL/TNW around 2.5x.
- Compliance & reconciliation — GST and ITR turnover tied out.
- Documentation — complete once collection was finished.
The banking band was the catch and the opening at the same time. Twenty-one unsecured EMIs hitting the current account every month dragged the average balance down and made the account read as over-extended. Yet none of it was caused by a weak business. It was caused by the firm solving a working-capital gap the expensive way — one short-tenor NBFC loan at a time — instead of with a single revolving limit priced like bank money.
A weak band in our scoring is never a disqualifier. It is the entry point for the advisory work.
Why a CGTMSE hybrid, and not a plain CGTMSE limit
Plain CGTMSE credit is collateral-free, but the guarantee cover has limits, and a borrower already showing a heavy unsecured stack rarely clears a clean collateral-free sanction at the ticket size this firm needed. The owner did hold property, but pledging real estate against the full ₹5 crore would have over-secured the facility and tied up an asset the family wanted to keep free.
The hybrid route solved both constraints. Under a CGTMSE hybrid structure, part of the limit sits under the government guarantee and part is backed by tangible security, so the borrower reaches a larger ticket while pledging far less. We split the ₹5 crore down the middle :
- ₹2.5 Cr — CGTMSE-guaranteed.
- No property pledged against this half.
- ₹2.5 Cr — collateral-backed.
- Secured by a fixed deposit plus one residential flat.
One limit. One rate. Half of it carried by the guarantee fund rather than by the owner’s property.
The build: one ₹5 Cr hybrid overdraft
We replaced the entire unsecured book with a single, fully interchangeable ₹5 crore working-capital line at a leading private bank — an overdraft with sub-limits, priced at *8.75%* against the *18–24%* the firm had been paying on its NBFC and fintech loans. The existing nationalized-bank cash credit (around 9.5%) and a small vehicle loan stayed in place, both already on sensible terms.
The new portfolio came down to exactly three facilities — the new hybrid OD, the continuing cash credit, and the vehicle loan — totalling about ₹10.24 crore, against the ₹10.58 crore the firm had carried across 28 lenders. Total debt barely moved. That was the point. This was never a deleveraging exercise. It was a re-pricing and re-shaping exercise: expensive, fragmented, short-tenor money converted into one cheap revolving limit.
The pre-disbursement choreography
Cleaning up an account this fragmented is where most restructurings quietly go wrong. The single most important call we made was on *how* the old loans were closed.
Several of the unsecured loans could have been settled below their book outstanding. We refused the settlement route on every one of them. A settlement or one-time-settlement tag lands on the commercial bureau and undoes exactly the leverage improvement the whole exercise is built to create — a borrower who looks lighter on paper but now reads as a defaulter to the next lender. Each account was closed as a *normal closure against a No-Objection Certificate*, preserving the promoter’s clean record.
Alongside that, we established sole banking, assembled the fixed deposit anchoring the secured half of the limit, and ran the title search, valuation and charge-holder NOCs needed before disbursement.
The result: ₹23 lakh a month to ₹8 lakh
Here is the before-and-after that the owner actually feels.
- Monthly debt servicing | Earlier | Now |
- Unsecured EMIs | ~₹19.0 L | nil
- New hybrid OD interest | — | ~₹3.65 L
- Cash credit interest | ~₹4.0 L | ~₹3.92 L
- Vehicle EMI | — | ~₹0.60 L
- *Total* | *~₹23 L* | *~₹8 L*
Roughly *₹15 lakh a month* — about *₹1.8 crore a year* — freed back into the business. A 65% cut in monthly debt outflow, with no fresh equity put in and almost no change in total borrowing. The cash that had been disappearing into NBFC EMIs now funds stock, credit terms to buyers, and the firm’s own growth.
*Verdict: BANKABLE.*
What this case teaches about CGTMSE for over-borrowed MSMEs
A few points worth keeping if your own business is in a similar position.
*An unsecured stack is a structure problem, not a verdict.* A firm drowning in fintech EMIs is usually not a weak business — it is a business that filled a working-capital gap with the wrong product. The fix is almost always consolidation into a single priced limit, not more borrowing.
*CGTMSE is bigger than most owners think.* The scheme ceiling was raised to *₹10 crore* with effect from 01 April 2025. A good deal of published guidance still quotes the older ₹5 crore figure. If an advisor is sizing your facility against ₹5 crore, the information is out of date.
*Collateral-free is not all-or-nothing.* The hybrid model lets you keep most of your property unpledged while still reaching the ticket size you need, because the guarantee fund carries part of the exposure.
*How you close old loans decides whether the cleanup counts.* Closing below book outstanding can help cash, but only if it is structured as a normal closure with an NOC. A settlement tag on the bureau quietly cancels the leverage improvement.
Frequently asked questions
1 What is a CGTMSE hybrid facility?
A facility where part of the credit limit is backed by the CGTMSE guarantee and part by tangible collateral such as a fixed deposit or property. It lets a borrower access a larger limit while pledging less security than a fully collateral-backed loan would require.
2 What is the maximum CGTMSE loan amount in 2025-26?
The guarantee cover ceiling is ₹10 crore per borrower, effective 01 April 2025.
3 Can CGTMSE help a business that already has many loans?
Yes. As this case shows, a CGTMSE-backed facility is often used to consolidate a scattered, expensive unsecured book into one priced working-capital limit, which both lowers the monthly outflow and cleans up the account.
4 Does a CGTMSE loan mean no collateral at all?
A plain CGTMSE limit is collateral-free up to the covered amount. A hybrid structure deliberately mixes guarantee cover with partial collateral to reach a higher ticket. The right choice depends on the borrower's profile and security position.
5 Who can advise on a CGTMSE hybrid structure in Pune?
Credit Core Finance structures and syndicates CGTMSE, working-capital and restructuring facilities for MSMEs across Maharashtra. See our [CGTMSE loan consultant in Pune](/cgtmse-loan-consultant-in-pune/) page for how the scheme works and how we appraise a file.
Talk to Credit Core Finance
If your business is carrying a stack of high-cost loans and a profitable balance sheet that the EMIs don’t reflect, the gap is usually structural and fixable. We appraise the file the way your credit manager will, then build the facility that fits.
Creditcore Finance : Call : 89563 34991
