The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, has notified the expansion of the Credit Guarantee Scheme for Startups (CGSS). Under the expanded regime, the ceiling on guarantee cover per borrower under the scheme has been increased from Rs. 10 crore to Rs. 20 crore. 

For instance, the extent of guarantee cover provided has also been increased to 85 percent of the amount in default for loan amounts up to Rs. 10 crore and 75 percent of the amount in default for loan amounts exceeding Rs. 10 crore. Additionally, the Annual Guarantee Fee (AGF) for startups in 27 Champion Sectors has been reduced to 1 percent per annum from 2 percent per annum. The government aims to increase India’s capacity in domestic manufacturing and self-reliance through strategic support to the champion sectors. 

CGSS: Reducing Risks

Beyond the monetary benefits, the expanded scheme will help reduce the perceived risks of lending to startups within domestic manufacturing, allowing established financial institutions to provide greater funding. This will enable startups to secure the financial runway needed for research and development (R&D), experimentation, and the creation of innovative technologies.

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CGSS: Enabling Operational Efficiency 

Several operational reforms and enabling measures, identified through consultations with the startup ecosystem, have been integrated into the expanded CGSS. These adjustments aim to make the scheme more appealing to both lenders and startups seeking funding support. The enhancements are designed to give the scheme a significant boost, allowing a broader range of startups to benefit, ultimately contributing to the country’s vision of becoming a Viksit Bharat.

CGSS: Enabling the Startup Ecosystem

The Credit Guarantee Scheme for Startups (CGSS) aims to support eligible startups by facilitating collateral-free debt financing through channels like working capital, term loans, and venture debt. To further boost entrepreneurship and provide greater credit support to innovators, the Union Budget 2025-26 has proposed an expansion of credit availability with enhanced guarantee coverage. 

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This initiative is designed to encourage financial institutions within the ecosystem to offer early-stage debt funding to startups.