Centre notifies credit guarantee scheme for startups

The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry has notified the credit guarantee scheme for start-ups.

About Credit Guarantee Scheme for Startups (CGSS):

• This scheme would help provide the much-needed collateral-free debt funding to start-ups.
• The scheme will act as a key enabler and risk mitigation measure for the lending institutions enabling collateral free funding to startups.
• The scheme has been approved for the purpose of providing credit guarantees to loans extended by Member Institutions (MIs) to finance eligible borrowers.
• Member Institutions (MIs) include financial intermediaries (banks, financial institutions, Non-Banking Financial Companies) engaged in lending/investing and conforming to the eligibility criteria approved under the Scheme.
• The credit guarantee cover under the Scheme would be transaction based and umbrella based.
• The exposure to individual cases would be capped at Rs. 10 crore per case or the actual outstanding credit amount, whichever is less.
• The umbrella-based guarantee cover will provide guarantee to Venture Debt Funds (VDF) registered under Alternative Investment Funds (AIF) regulations of Securities and Exchange Board of India (SEBI).