Government expands credit scheme for startups

New Delhi

The government has expanded the Credit Guarantee Scheme for Startups (CGSS) to offer more support to young businesses. The Department for Promotion of Industry and Internal Trade (DPIIT) has raised the guarantee cover per borrower from ₹10 crore to ₹20 crore. This move will help startups get larger loans with more confidence. For loans up to ₹10 crore, the government will now guarantee 85% of the unpaid amount. For loans above ₹10 crore, the cover will be 75%. This reduces the risk for lenders and encourages them to give more funds to startups.

In addition, the Annual Guarantee Fee (AGF) for startups in 27 Champion Sectors has been reduced from 2% to 1% per year. These Champion Sectors were chosen under the 'Make in India' plan to boost manufacturing and services in India. The lower fees are expected to attract more funding and support innovation.

These changes align with Prime Minister Narendra Modi’s vision of building a self-reliant, innovation-led India. With stronger guarantees and reduced fees, more banks and financial groups are expected to support startups. The new version of the scheme also includes reforms based on feedback from the startup community. These changes aim to make the scheme easier for both lenders and borrowers. The CGSS was first launched in October 2022 to offer credit support to startups through banks and other financial institutions. With the 2025 budget supporting more early-stage debt for startups, this expansion hopes to unlock fresh opportunities for innovation, research, and development—paving the way for a stronger startup ecosystem and a developed India.