Credit Guarantee Scheme for Startups (CGSS)
CGSS was notified on 6th Oct 2022 to provide financial assistance to startups in India. It provides guarantee cover to Scheduled Commercial Banks (SCBs), All India Financial Institutions (AIFI), Non-Banking Financial Companies (NBFCs) and Securities and Exchange Board of India (SEBI) registered Alternative Investment Funds (AIFs) for lending to eligible startups.
Highlights
- 257 loans have been sanctioned amounting to Rs 601.86 crore under the scheme
- Around 75% of sanctioned loans were for working capital needs of startup
- Startups enrolled under the scheme have reported nil NPAs.
- As of Dec 2024, employment generated by these startups stands at 20871.
What is CGSS ?
- It is a financial assistance scheme for startups.
- It provides guarantee coverage to financial institutions that lend to eligible startups
- It provides guarantee coverage through National Credit Guarantee Trustee Company Limited (NCGCTC)
Objectives
- Finance champion sector startups
- Provide collateral free debt funding to startups
- Promote entrepreneurship & job creation
- Strengthen startups and innovation ecosystem
Benefits of the CGSS
- Collateral free loans
Startups can access loans without pledging tangible security or third-party guarantees. - Government Guarantee Cover
Provides credit guarantee coverage (up to 75–85% of the sanctioned loan amount, depending on borrower category) to lending institutions - Encourages Bank Lending
Reduces the risk perception of lenders, making them more willing to extend financial support to startups - Boosts Growth & Scalability
Helps startups access timely funds for operations, expansion, R&D, and scaling business models
Financial Assistance Under the Scheme
Financial assistance in this scheme is not a grant or subsidy, but a guarantee support given by the govt (through NCGTC) to lending institutions so that they can lend to startups without demanding full collateral and share risk.
| Model | Assistance | Annual Guarantee Fee (AGF) paid by Member/Lending Institution |
| Transaction based - on single borrower basis for Banks/NBFCs/FIs | For loan sanctioned up to Rs 3 crores, the scheme guarantees 80% of the default amount For loan sanctioned between Rs 3 to 5 crores, the scheme guarantees 75% of the default amount For loan sanctioned above 5 crores, the scheme guarantees 65% of the default amount | AGF is 1% p.a. of outstanding amount |
| Umbrella based - on portfolio basis for Alternative Investment Funds | Scheme guarantees coverage up to 5% on pooled investment (Max up to Rs 20 crore per borrower) | AGF is 0.15% p.a. of outstanding amount |
Eligibility for CGSS
You are eligible if:
- Your startup is recognized by Dept for Promotion of Industry & Internal Trade (DPIIT)
- Your startup has stable revenue stream & lenders find you eligible
- Your startup is involved in innovation & has potential for employment generation
- Your startup has not completed 10 years or your turnover is not more than Rs 100 crore.
You are not eligible if:
- Your startup is not formally recognized by DPIIT
- Your startup is an entity formed as Merger/ Demerger/ Acquisition/ Amalgamation/ Absorption/ Compromise/ Arrangement/ Conversion under Companies Act, 2013 & Income Tax Act 1961
- Your startup is an entity having foreign holdings/subsidiary/joint venture or incorporated outside India
- Your startup has completed 10 years or your turnover exceeds Rs 100 crore rupees
Documents Required for CGSS
- Certificate of Incorporation / Registration (as Pvt. Ltd., LLP, or Partnership).
- PAN card of the company and promoters & GST registration
- Income Tax Returns of the company and promoters
- Audited financial statements (Profit & Loss, Balance Sheet, Cash Flow)
- The exact list may vary by the lending institution (bank/NBFC/AIF).
Application Process for CGSS
You can apply:
- Online application needs to be submitted on the DPIIT Portal
Examples of Where CGSS Can Be Used
- A DPIIT-recognized Healthtech startup gets a ₹5 crore working capital loan from a bank under CGSS without pledging collateral, helping it scale telemedicine services.
- A clean energy startup raises ₹12 crore as venture debt from an AIF, with 75% of the loan guaranteed under CGSS, lowering the investor’s risk.
- An AgriTech startup secures a ₹3 crore term loan from an NBFC under CGSS, using the funds to expand cold storage facilities in rural areas.
Power Combos with CGSS
- SIDBI Fund of Funds for Startup (FSS) Scheme
- Startup India Seed Fund Scheme
- Bank Credit Facilitation Scheme
- Mutual Credit Guarantee Scheme
