The Department for Promotion of Industry and Internal Trade (DPIIT), notified the expansion of the Credit Guarantee Scheme for Startups (CGSS) to increase capital mobilization for startups.
Objectives
Key Features
To provide guarantee upto a specified limit against credit instruments extended by Member Institutions (MI) to finance eligible Startups
Facilitate much needed collateral free debt funding to Startups
Nodal Ministry: Ministry of Commerce & Industry.
Purpose: Providing credit guarantees to loans extended to eligible startups.
Process for credit guarantees to loans: CGSS does not directly guarantee loans to startups.
Instead, National Credit Guarantee Trustee Company (NCGTC) provides guarantee cover to MIs that lend to startups.
Ceiling on guarantee cover
Maximum guarantee cover per borrower shall not exceed Rs. 20 crores.
The credit facility being covered here should not have been covered under any other guarantee scheme
In respect of credit facilities where a portion of the same has been secured by way of partial collateral security, the remaining part comprising of the unsecured facility will be covered under the guarantee scheme
Instruments of Assistance: Venture debt, working capital, subordinated debt/mezzanine debt, debentures, optionally convertible debt and other fund-based as well as non-fund-based facilities, which have crystallised as debt obligations.
