Govt clears revised credit guarantee scheme for startups, max cover ₹20 cr
New Delhi, May 8, 2025
The government on Thursday approved a revised Credit Guarantee Scheme for Startups (CGSS), under which the maximum guarantee cover per borrower has been doubled to Rs 20 crore.
The broad objective of CGSS is to provide guarantee up to a specified limit against credit instruments extended by member institutions to finance eligible startups.
This scheme would help provide the much needed collateral-free debt funding to startups, the department for promotion of industry and internal trade (DPIIT) said in a notification.
This notification supersedes the earlier notification dated October 6, 2022 on the scheme and comes into effect from May 8.
"Maximum guarantee cover per borrower shall not exceed Rs 20 crore," it said. It was earlier Rs 10 crore.
Member institutions include a financial intermediary (banks, FIs, NBFCs, AIFs) engaged in lending/investing and conforming to the eligibility criteria duly approved under the scheme.
To further catalyse entrepreneurship by providing enhanced credit support to innovators and encourage financial institutions in the ecosystem to provide early-stage debt funds to startups, the Union Budget 2025-26 had proposed the enhancement of credit availability with guarantee cover for startups.
In line with the announcement, the DPIIT has notified the expansion of the CGSS which increases the ceiling on guarantee cover per borrower under the scheme from Rs 10 crore to Rs 20 crore.
The extent of guarantee cover provided has also been increased to 85 per cent of the amount in default for loan amount up to Rs 10 crore and 75 per cent of the amount in default for loan amount exceeding Rs 10 crore.
Further, the Annual Guarantee Fee (AGF) for startups in 27 champion sectors has been reduced to 1 per cent per annum from 2 per cent earlier.
The expanded scheme will further reduce the perceived risks associated with lending to startups in established financial institutions, enabling greater financial flow and runway for startups to undertake research and development, experimentation, and create cutting-edge innovation and technologies.
[Press Trust of India]
