At a time when businesses are feeling the heat of global uncertainty, the government has stepped in with fresh support.
The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS 5.0), a credit guarantee scheme aimed at helping MSMEs (Micro, Small, and Medium Enterprises), airlines and other stressed sectors manage cash flow and continue operations.
Announcing the decision, Ashwini Vaishnaw said the scheme is designed to tackle liquidity challenges arising from the ongoing West Asia conflict. With an outlay of Rs 18,100 crore, the scheme is expected to unlock additional credit worth up to Rs 2.55 lakh crore. Out of this, Rs 5,000 crore has been set aside for the aviation sector.
Under the Emergency Credit Line Guarantee Scheme 5.0, the government will offer 100% credit guarantee for MSMEs and 90% for non-MSMEs and airlines. This guarantee will be provided through National Credit Guarantee Trustee Company Limited, giving lenders the confidence to extend loans without worrying about defaults.
The scheme will be available to MSMEs, non-MSMEs with existing working capital, and airlines with standard loan accounts as of March 31, 2026. Borrowers can take additional credit of up to 20% of their peak working capital used in the last quarter of FY26, capped at Rs 100 crore. For airlines, the limit goes up to Rs 1,500 crore.
Loans will come without any guarantee fee. MSMEs and other businesses will get a five-year tenure with a one-year break on repayment, while airlines will have seven years with a two-year moratorium.
Pallavi Shrivastava, Co-Founder of Progcap, said, “ECLGS 5.0 comes at a time when many MSMEs are dealing with tighter cash flow cycles and increasing uncertainty in their day-to-day operations. What really matters in such moments is timely access to working capital and the 100% guarantee structure helps unlock that by giving lenders the confidence to move faster.”
She added, “From what we see on the ground, demand for short-term, flexible credit is only increasing, and interventions like this play a critical role in helping businesses stay resilient, keep their operations running, and protect livelihoods across the value chain.”
The government believes the scheme will help businesses stay afloat, protect jobs and keep supply chains running smoothly.
For many small firms and airlines, this could be the support they need to ride out the current uncertainty.