CGSS
Credit Guarantee Scheme for Startups
Central scheme that provides credit guarantee cover to banks, NBFCs and AIFs for loans and debt instruments extended to eligible DPIIT-recognised startups, enabling higher ticket collateral-free funding.
Who Can Apply?
DPIIT-Recognised Startup
The borrower must be a startup recognised by DPIIT under the Startup India framework at the time of sanction.
Standard Borrowal Account
The startup’s loan account should be standard and not classified as NPA or in default when guarantee cover is issued.
Eligible Lenders (Member Institutions)
Credit must be extended by a Member Institution such as a Scheduled Commercial Bank, eligible NBFC, All India Financial Institution or SEBI-registered AIF onboarded under CGSS.
Innovation & Scalability
Startup should be engaged in innovation, development or improvement of products or services with scalable business model and employment potential.
Eligible Credit Instruments
Coverage can include working capital, term loans, venture debt, optionally convertible debt and similar permitted instruments.
Scheme & Turnover Limits
Startup must fall within turnover, age and sector norms specified in the latest CGSS guidelines and not be part of excluded activities.
Key Features
High Credit Guarantee Cover
Provides guarantee cover on a significant portion of the amount in default, up to a defined percentage and overall limit per startup.
Multiple Lending Channels
Covers debt provided by scheduled commercial banks, eligible NBFCs, All India Financial Institutions and SEBI-registered AIFs that are enrolled as Member Institutions.
Portfolio / Instrument Coverage
Guarantees can be structured for portfolios of startup loans and for a variety of credit instruments including venture debt and term loans.
Supports High-Growth Startups
Targets innovative, high-potential startups needing larger ticket debt for R&D, capex, scale-up and runway extension.
Digital Guarantee Processing
Guarantee issuance is handled online via NCGTC and related portals, with automatic cover once eligibility parameters are confirmed by lenders.
Risk Mitigation for Lenders
Reduces perceived risk for formal institutions, encouraging them to extend more collateral-free credit to startups.
Scheme Benefits
Application Process
Obtain DPIIT Startup Recognition
Register on the Startup India portal and secure DPIIT recognition to be considered an eligible startup under CGSS.
Prepare Business Plan & Financials
Create a robust business plan, financial projections, funding requirement details and repayment strategy for lenders.
Approach Member Lending Institution
Reach out to an eligible bank, NBFC, AIF or financial institution that is registered as a Member Institution under CGSS and apply for the desired credit facility.
Loan Sanction & Guarantee Cover
Once the lender sanctions the facility and confirms eligibility, it applies on the CGSS/NCGTC portal for guarantee cover; after approval, credit is backed by the scheme while the startup receives funds on agreed terms.
Documents Required
Frequently Asked Questions
Does CGSS give loans directly to startups?
No. CGSS does not lend directly; it provides credit guarantee cover to eligible lenders for loans and debt instruments extended to startups.
What is the maximum guarantee limit under CGSS?
Under the expanded framework, guarantee cover can be provided on eligible credit facilities up to around ₹20 crore per startup, subject to scheme conditions.
Is collateral required for loans covered under CGSS?
The scheme is designed to promote collateral-free funding, so lenders normally extend credit without traditional collateral when availing CGSS cover, though final structure depends on lender policy.
Which startups are eligible for CGSS support?
Startups must be DPIIT-recognised, not in default or NPA status, and engaged in innovation or scalable business models that meet the latest CGSS eligibility norms.
How can a startup apply under CGSS?
The startup applies to an eligible lender with its loan proposal; after sanction, the lender applies on the CGSS / NCGTC portal for guarantee cover while the startup deals only with the lending institution.
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