India’s Startups Receive Rs 20 Cr Credit Boost Under Expanded Credit Guarantee Scheme

New Delhi, May 9 (KNN) The Department for Promotion of Industry and Internal Trade (DPIIT), has announced expansions to the Credit Guarantee Scheme for Startups (CGSS), enhancing financial support available to India's innovation ecosystem.

The CGSS scheme provides guarantees for credit instruments extended to startups by Scheduled Commercial Banks, All India Financial Institutions, Non-Banking Financial Companies, and SEBI-registered Alternative Investment Funds.

The primary objective of CGSS is to facilitate collateral-free debt funding for eligible startups through various financial instruments including working capital, term loans, and venture debt.

The ceiling on guarantee cover per borrower under the scheme has been doubled from Rs. 10 crore to Rs. 20 crore. 

Additionally, the government has increased the extent of guarantee coverage to 85 percent of the default amount for loans up to Rs. 10 crore and 75 percent for loans exceeding Rs. 10 crore.

The expanded scheme aims to address the financing challenges faced by innovation-driven startups by reducing perceived lending risks, thereby encouraging more financial institutions to provide credit support.

In a targeted move to strengthen India's manufacturing capabilities, the Annual Guarantee Fee (AGF) for startups in 27 Champion Sectors has been reduced from 2 percent to 1 percent per annum. 

These sectors, identified under the 'Make in India' initiative, are expected to benefit from more attractive funding conditions, which should stimulate innovation in domestic manufacturing and advance self-reliance goals.

(KNN Bureau)