Collateral-free credit guarantee of up to ₹10 crore for Indian startups. 

CGSS provides credit guarantees to startups against loans taken from Member Institutions (MIs) of the scheme. The startup, for this scheme's purpose, is one registered by the Department of Promotion of Industry and Internal Trade (DPIIT). 

The scheme provides the guarantee through the National Credit Guarantee Trustee Company (NCGTC). NCGTC provides guarantee cover to the MIs who extend loans to startups. The scheme provides collateral-free debt funding of up to ₹10 crore, which is net of the value of any collateral provided. CGSS credit guarantee schemes can be transaction-based or umbrella-based. 

Why choose CGSS and how? 

With over ₹1.12 lakh startups registered under DPIIT across 763 districts in India, the startup ecosystem in India is the 3rd  largest in the world. A collateral-free loan guarantee scheme is the much-needed financial support for these businesses. Providing collateral is a struggle for most of these businesses, as startups generally start from scratch.  

The startup needs to approach an MI, like HDFC Bank, and seek the required credit facility under the CGSS. HDFC Bank checks if the startup is eligible for the scheme and assesses the project's feasibility and viability. Simultaneously, HDFC Bank also applies for the guarantee cover at the NCGTC portal for the loan. NCGTC issues the guarantee scheme cover if the eligibility parameters are met. 

Benefits of CGSS 

The Credit Guarantee Scheme for startups benefits you in the following ways: 

  • No collateral requirement - Most startups bootstrap their way towards success. During this period, they face challenges in arranging finance due to insufficient collateral. The collateral-free CGSS guarantee opens up an easy source of finance for startups. 
  • Nominal guarantee fee - The credit guarantee cover is provided against an annual guarantee fee of 2% per annum on the disbursed or outstanding amount. In the case of working capital facilities, it is charged on the sanction amount. For female entrepreneurs and units from North-East India, the fee is 1.5%. The MLI may or may not pass on this fee to the borrowing startup. 
  • Flexible credit facilities - Loans under CGSS can be availed to meet various business needs, whether short-term or long-term. The loans can be in the form of venture debt, term loan, working capital loan, subordinated debt/mezzanine debt, debentures, optionally convertible debt, etc. It can also cover a non-fund-based facility that has become a debt obligation. Further, the credit guarantee may be transaction-based or umbrella-based. 
  • MI support - The member institution applies for the credit guarantee cover against the loan applied by the startup. The eligibility and project feasibility are ensured by the MI. The startup doesn’t need to coordinate between NCGTC and MI for the CGSS loan approval.  

Eligibility criteria for CGSS 

To avail of a credit guarantee scheme facility under CGSS, the borrower must fulfil the following eligibility criteria:  

  • The borrower must be a startup recognised by the DPIIT as per its gazette notification, issued from time to time 
  • The startup must not have any default credit under any lending or investing institution 
  • It should not be classified as a Non-Performing Asset as per RBI guidelines 
  • The member institution must certify the eligibility of the applicant 
  • The business must be at a stable revenue stage, as assessed from audited monthly statements of 12 months, amenable to debt financing 
  • The startup meets any other eligibility criteria as prescribed under the scheme