Credit Guarantee Scheme for Startups 2024: Benefits and Interest Rate

The Credit Guarantee Scheme for Startups 2024 was introduced by the Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPIIT). This innovative program aims to support companies by offering vital loan guarantees. The government has announced that up to a specific amount, new enterprises would be able to get loans without the need for collateral under the credit guarantee scheme. In this article you get every necessary detail regarding this scheme including its objective, eligibility criteria, benefits, required documents and interest rate.

Credit Guarantee Scheme for Startups 2024

The Department for Promotion of Industry and Internal Trade (DPIIT), a central government department, is supervised by the Ministry of Commerce and Industry in India. The Credit Guarantee Scheme for entrepreneurs was created by the Indian government as a competitor to the capital generation assistance system. Its objective is to increase the quantity of domestic investment accessible to Indian entrepreneurs, therefore furnishing them with the necessary circumstances for market success.

Credit Guarantee Scheme for Startups

Providing credit guarantees up to a certain extent against loans made by institutions and qualifying organizations listed under this scheme is the aim of the credit guarantee assistance plan. Certain establishments and commercial banks are suitable to offer suitable prospects to the growing Indian startups. It would only be possible for Indian business owners to obtain loans from domestic platforms once this approach is developed.

Bhuvan Aadhaar Portal 2024

Overview of Credit Guarantee Scheme for Startups 2024

SchemeCredit Guarantee Scheme for Startups 2024
Introduced ByPrime Minister of India
ObjectiveTo Provide collateral free financing to companies

Objective of Credit Guarantee Scheme for Startups 2024

The main objective of this scheme is to increase the amount of domestic finance accessible to Indian start-ups and will supplement the present efforts that are part of the Startup India initiative. The scheme was created to offer credit guarantees, up to a certain maximum against loans made available by member institutions to fund qualifying borrowers, mostly start up businesses. This assurance will be given in opposition to loans made by the membership to qualified borrowers.

Benefits of Credit Guarantee Scheme for Startups 2024 

The benefits of this scheme is given below:

  • The PM’s Startup India program would allow businesses to get loans without the need for collateral.
  • Plan participants will provide a guarantee to DIPP approved businesses.
  • For over 10 startup loans annually, CGSS will provide portfolio based guarantees.
  • Up to Rs.150 lakh, this scheme grants 75% credit.
  • Up to Rs. 5 crores in credit guarantees, including cash flow, venture capital, long-term debt, maybe convertible bonds, etc would be given to each eligible case.
  • Loan requests for microbusinesses under Rs.5 lakh will be approved in up to 85% of cases.
  • Up to 80% of loans would go to NER MSMEs and women-owned businesses (including Sikkim).
  • A 50% guarantee up to Rs. 50 lakh would be provided for MSME retail trade.

Pre Requisites for Documents  Credit Guarantee Scheme for Startups 2024 

  • The most important need is that all directors or partners who are residents have an Aadhaar card, and non-residents need a passport number.
  • Members may include scheduled commercial banks and financial institutions, NDFCs registered with the RBI, or Alternative Investment Funds (AIFs).
  • CGSS will keep to the trusteeship requirements set out by the National Credit Guarantee Trust Company (NCGTC).
  • Without the need for a guarantee or security from another organization, third party members would provide up to Rs.500 lakh to eligible businesses.
  • The MSME Credit Guarantee Scheme (MS) would be supervised by a Management Committee.
  • Conflicts of interest are under the authority of the Risk Evaluation Committee (REC).

Credit Guarantee Scheme Eligible Lending Firms

  • Schedule Commercial Banks
  • Small Industries Development Bank of India
  • Export and Import Bank of India
  • North Eastern Development Finance Corporation
  • Delhi Financial Corporation
  • Kerala Financial Corporation
  • National Small Industries Corporation
  • J&K Development Finance Corporation LTD
  • Tamil Nadu Industrial Investment Corporation LTD
  • AP State Financial Corporation

Credit Guarantee Fee under CGSS

  • 1.0% of the total loan amount issued is charged as the yearly guarantee fee.
  • A 0.75 percent Guarantee Fee will be imposed on loan amounts up to Rs.5 lakh for women owned enterprises, microbusinesses and NER units and a 0.85 percent Guarantee Fee on credit amounts between Rs.5 and Rs.100 million.

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