The Credit Guarantee Scheme for Startups is presented by the Indian government in order to provide proper opportunities to startups who are currently in their beginner stage and the opportunities provided by the prime minister in order to help all the startups so that they can expand their businesses and services across India. You can check out the details related to the eligibility criteria which is needed to apply for the credit guarantee scheme for start-ups in 2023. We will share the step-by-step procedures through which you will be able to apply for credit guarantee schemes for startups.
About Credit Guarantee Scheme for Startups
The Credit Guarantee Scheme for Startups for startups creates by the Indian government in order to compete with the capital generation support system which has a goal of working towards increasing domestic funding available to the Indian startup so that the startups can get proper opportunities to thrive in the market. The purpose of the credit guarantee support scheme is to provide credit guarantees to a specified limit against the loans which are extended by the Institutions and the eligible borders which are presented under this scheme. There are certain Institutions and commercial banks which are fit to provide proper opportunities to the startups which are bubbling in India. Indian entrepreneurs will be able to take loans from domestic platforms only through the development of this scheme.
Benefits Of Credit Guarantee Scheme for Startups
The startup India program was presented by the prime minister in order to provide collateral-free financing to companies that are relatively new as compared to the old community in India. The startups will be able to get proper opportunities according to their portfolios and there will be 10 + startup loans each year given as per the eligibility criteria mentioned according to the borrower and the institution which is providing the loan. The Credit Guarantee Scheme for Startups will offer 75% credit up to rupees 150 lakh to the beneficiaries. Every qualified case will get up to Rs. 5 crores in credit guarantees, including cash flow, venture capital, potentially convertible bonds, long-term debt, etc. Up to 85% of microbusinesses’ loan requests under Rs. 5 lakh would grant. Women-owned and NER MSMEs will get up to 80% loans (including Sikkim).
Pre-requisites of CGSS
The following documents and information is needed in order to successfully apply for the credit guarantee scheme for startups in 2023:-
- For KYC, Aadhaar will be compulsory for all resident partners or directors, while the passport number will be mandatory for non-resident partners or directors.
- The lending institutions that are members of this scheme may be Alternate Investment Funds (AIFs), scheduled commercial banks/financial institutions, or NDFCs registered with the RBI.
- CGSS will function as per the terms of the trusteeship management of the National Credit Guarantee Trust Company (NCGTC).
- Member lending institutions will offer guarantee amounts of up to Rs.500 lakh to eligible startups, without requiring a third-party guarantee or security.
- This Credit Guarantee Scheme for MSME will monitor and supervise by a Management Committee (MS).
- Conflicts of interest will address and taken up by the Risk Evaluation Committee (REC) to be formed for this purpose.
Eligible Lending Institutions
Only the following commercial banks and Institutions will be able to land using this scheme:-
- Scheduled commercial banks – Public sector banks, private sector banks, and foreign banks.
- Certain Regional Rural Banks categorized as ‘Sustainable Viable’ by NABARD
- Certain other financial institutions are deemed as chosen by the Govt. of India as per set criteria. These include:
- Small Industries Development Bank of India (SIDBI)
- Delhi Financial Corporation
- North Eastern Development Finance Corporation (NEDFI)
- Kerala Financial Corporation
- National Small Industries Corporation (NSIC)
- Jammu & Kashmir Development Finance Corporation Ltd
- Tamil Nadu Industrial Investment Corporation Ltd.
- Export-Import Bank of India
- Andhra Pradesh State Financial Corporation
The candidates will be able to get the following credit through the development of this prestigious scheme:-
- A composite Annual Guarantee Fee, of 1.0 % p.a. of the credit amount provide, will charge.
- Under this, a Guarantee Fee of 0.75% will charge for credit amounts of up to Rs.5 lakh, and 0.85% for credit amounts over Rs.5 lakh and below Rs.100 lakh, will be charged from women-own enterprises, micro-enterprises, and NER units (including Sikkim).
- Guarantee Period under CGSS
- Under CGSS, the guarantee cover will be provided for the period agreed upon for the credit facility. For working capital, guarantee cover is provided for a block of 5 years.
- A GST rate of 18% will be applicable on banking services and products from 01 July 2017.
Online Application Process
All of the startups who are in need of funding can apply for the prestigious program presented by the Indian government by filling out the application form as soon as it is available by the concerned authorities or talking to their nearest CSS centre.