The Credit Guarantee Scheme for Startups is formulated by the Government of India. It enables the startups to avail of the loans for their business without any collateral. The Credit Guarantee Scheme for Startups is a part of the Startup India action plan.
Also Read: Govt notifies Credit Guarantee Scheme for Startups (CGSS)
The present article briefly explains the Credit Guarantee Scheme for Startups.
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Features as well as preconditions of the Credit Guarantee Scheme for Startups –
The features and preconditions of the Scheme are explained hereunder –
1. Benefits under the Scheme are provided to the startups that are recognized by the Department of Industrial Policy and Promotion (DIPP) based on Gazette Notification issued from time to time.
2. The guarantee under the Scheme will be offered on the basis of the portfolio. Notably, every included portfolio will contain 10 or more startup loans for the respective Financial Year.
3. Every eligible startup will be offered an amount up to INR 5 Crores. The same includes assistance like working capital, optionally converted debenture, term loan, venture capital, debentures etc.
4. The scheme will provide credit to cover up to 75% of the credit facility. However, it will be subject to the upper limit of INR 150 Lakhs.
5. In case of micro-enterprises looking for loans below INR 5 Lakhs, the scheme will offer to cover up to 85% of the credit facility.
6. MSME being operated/ owned by women and loans granted to the North-East region including Sikkim will cover up to 80% of the credit facility.
7. MSME retail trade will be offered 50% of the amount of the credit facility. However, it will be subject to the upper limit of INR 50 Lakhs.
Essentials of the Credit Guarantee Scheme for Startups –
The essentials of the Scheme are explained hereunder –
1. The following is needed to satisfy the KYC norms –
| Particulars | Essentials |
| For all resident partners/ directors | Aadhaar number |
| For all non-resident partners/ directors | Passport number |
2. The functioning of the Scheme will be taken care of by the management of the National Credit Guarantee Trust Company (NCGTC). The terms and rules thereof for the functioning of the Scheme will also be set by NCGTC.
3. Eligible startups will be offered guarantee amounts up to INR 500 Lakhs by the member lending institutions. The same doesn’t require any collateral security.
4. A management committee will monitor and supervise the Credit Guarantee Scheme for MSME.
5. A Risk Evaluation Committee will take up and address conflict of interest in any of the cases.
Member Lending Institutions under Credit Guarantee Scheme for Startups –
The following is included in the list for Member Lending Institutions –
- Private Sector Banks;
- Public Sector Banks;
- Regional Rural Banks (categorized as ‘Sustainable Viable’ by NABARD);
- Lending Institutions;
- Foreign Banks;
- Non-Banking Financial Institutions;
- Scheduled Urban Co-operative Banks;
- Small Finance Banks.
Guarantee fee and Guarantee period under Credit Guarantee Scheme for Startups –
Guarantee fee charged under Credit Guarantee Scheme for Startups is tabulated hereunder –
| Particulars | Guarantee fee |
| Composite Annual Guarantee fee (general) | 1% per annum of the credit amount |
| Guarantee fee with respect to credit amount up to INR 5 Lakhs | 0.75% per annum of the credit amount |
| Guarantee fee with respect to credit amount between INR 5 Lakhs to INR 100 Lakhs | 0.85% per annum of the credit amount |
The Guarantee period under Credit Guarantee Scheme for Startups is tabulated hereunder –
| Particulars | Guarantee period |
| In the case of working capital | Guarantee cover for a block of 5 years |
| In any other case | Guarantee cover as agreed upon for the credit facility. |
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please do not send notifications as it is so many notifications that we cant bear it