Credit Guarantee Scheme for Startups (CGSS) – May 2025 Update

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The Credit Guarantee Scheme for Startups (CGSS) is a flagship initiative by the Government of India to improve credit accessibility for DPIIT-recognized startups. By offering credit guarantees to lenders, it encourages financial institutions to fund innovative businesses that may not have traditional assets or credit histories.

Key Features

  • Credit Guarantee Limit Increased: The maximum guarantee cover has been increased to ₹20 crore per startup.

  • Reduced Guarantee Fee: For startups in 27 identified focus sectors, the annual guarantee fee has been reduced to 1% (from the usual 2%).

  • Flexible Tenure: Loan tenures are flexible and aligned with the startup’s repayment capacity, subject to lending norms.

Eligibility Criteria

For Startups:

  • Must be recognized by DPIIT.

  • Should maintain a stable revenue stream, supported by audited financials for the past 12 months.

  • Must have no loan defaults or be classified as an NPA.

  • Must be certified as eligible by the lending institution.

For Lending Institutions:

  • Must be a Scheduled Commercial Bank, NBFC (rated at least BBB, net worth ₹100 crore or more), or a SEBI-registered AIF.

  • Should be registered under the scheme to issue guarantees.

Application Process

For Startups:

  1. Obtain DPIIT recognition.

  2. Approach a registered lending institution.

  3. Undergo assessment based on CGSS norms.

  4. Once approved, the lender applies for guarantee cover with the NCGTC.

For Lenders:

  1. Submit board resolution and undertaking to register with NCGTC.

  2. Access the CGSS portal to manage applications and guarantees.

Focus Sectors (27 in total)

Includes key strategic and high-growth areas like:

  • Aerospace & Defence

  • Biotechnology

  • Pharmaceuticals & Medical Devices

  • Capital Goods

  • Chemicals & Petrochemicals

  • Food Processing

  • IT & ITES

  • Education Services

  • Financial, Legal, and Environmental Services

  • Automotive, Electronics, Construction, Tourism, and more

Scheme Impact (as of Dec 2024)

  • Loans Guaranteed: 257

  • Total Value: ₹601.86 crore

  • Jobs Created: Over 20,000

  • Coverage: 18 states, with strong outreach in Tier II & Tier III cities

  • Support for: 19 Export-Oriented and 19 Import-Substitution units

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intern shekunj
intern shekunj