Govt Doubles CGSS Loan Guarantee Limit for Startups, Cuts AG Fees for Champion Sector
The widened scheme will minimize the perceived risks of lending for financial institutions and give startups better access to funding for development, research, and scaling up operations
loan – CGSS – taxscan
loan – CGSS – taxscan
The Government has increased the Credit Guarantee Scheme for Startups (CGSS) of the startups twice from Rs. 10 crore to Rs. 20 crore. Moreover, the guarantee cover has been increased to 85% of the default value for loans of up to ₹10 crore and 75% for over ₹10 crore.
Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry has also notified that the Annual Guarantee Fee (AGF) for startups working in 27 Champion Sectors has been reduced to half from 2% to 1% per annum. These sectors, as chosen under the 'Make in India' initiative, are meant to enhance India's manufacturing and service capacities.
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The widened scheme will minimize the perceived risks of lending for financial institutions and give startups better access to funding for development, research, and scaling up operations. Reforms in operations and measures based on stakeholder consultations have also been incorporated to render the scheme more accessible and appealing.
“The expanded Scheme will further reduce the perceived risks associated with lending to startups in established financial institutions, enabling greater financial flow and runway for startups to undertake research and development (R&D), experimentation, and create cutting-edge innovation and technologies” stated the ministry in its press release.
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This was initiated in January 2016 under the Startup India scheme, CGSS was notified during October 2022 to enable collateral-free credit from banks, financial institutions, NBFCs, and SEBI-registered AIFs.
The Union Budget 2025-26 had also suggested improvements in the scheme, and the present expansion will further catalyze entrepreneurship and aid inIndia's vision of a Viksit Bharat.
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