The Ministry of Micro, Small and Medium Enterprises (MSME) has launched credit guarantee support for invoice discounting through the Trade Receivables Discounting System (TReDS), aimed at improving working capital access for Micro and Small Enterprises (MSEs).

As part of the rollout, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) portal has been integrated with the TReDS ecosystem. The guarantee facility is now available on three platforms — M1xchange, RXIL and DTX (KredX).

The initiative follows the Union Budget 2026-27 announcement on providing credit guarantee coverage for invoice discounting through TReDS. The facility is expected to reduce credit risk for financiers and encourage greater financing of eligible receivables, enabling MSEs to access funds against unpaid invoices more quickly.

The integration has also digitised the guarantee process for financiers. They can verify invoice eligibility and apply for CGTMSE coverage directly through the platforms. The system enables automatic calculation and debit of guarantee fees, followed by generation of the guarantee cover note and related invoice documentation.

Dr Rajneesh, Additional Secretary and Development Commissioner, Ministry of MSME, said the initiative will strengthen the formal credit ecosystem for MSMEs and help address the issue of delayed payments faced by MSEs.

TReDS is an RBI-regulated electronic platform that enables MSMEs to obtain early payment against outstanding invoices from corporate buyers, government departments and public sector undertakings. Multiple financiers participate through competitive bidding to provide invoice financing.

The TReDS ecosystem has expanded significantly, with invoice discounting rising from around Rs 40,000 crore in FY 2021-22 to Rs 3.5 lakh crore in FY 2025-26.

Key Features of the Guarantee Scheme

Eligibility: Both the buyer and seller must qualify as Micro or Small Enterprises.

Guarantee cover: Up to 75% of the amount in default.

Maximum exposure for MSE buyers: Rs 10 crore on a revolving basis.

Maximum exposure for MSE sellers: Rs 2 crore on a revolving basis.

The government expects the initiative to improve liquidity, reduce the impact of delayed payments and provide MSMEs with faster access to formal working capital through the TReDS network.