Apply for CGSS – Credit Guarantee Scheme for Startups

India’s startup ecosystem is expanding rapidly, but securing reliable funding continues to be an obstacle for many early-stage companies, especially those without assets to pledge. To bridge this gap, the Government of India launched the Credit Guarantee Scheme for Startups (CGSS) under the larger Startup India initiative.

The Startup Credit Guarantee Scheme is designed to support innovative businesses by providing a government-backed guarantee to banks, NBFCs, and Alternative Investment Funds (AIFs) that lend to startups. With a dedicated corpus of ₹2,000 crore, CGSS empowers startups to access capital without collateral, speed up growth, and reduce early financial risks.

What is the Credit Guarantee Scheme for Startups (CGSS)?

The Credit Guarantee Scheme for Startups is a government-backed programme that provides a credit guarantee of up to ₹10 crore per startup for loans extended by approved lenders. This guarantee encourages lenders to fund high-potential ventures, even if they lack collateral or long credit histories.

The scheme covers multiple forms of credit, including working capital loans, term loans, venture debt, debentures and optional convertible debt. This makes the CGSS loan suitable for early-stage, growing, or scaling businesses across various sectors.

Key Features of the CGSS Loan

Here are some of the key features of the Credit Guarantee Fund Scheme for startups:

1. Collateral-Free Funding

Startups can access financial support without pledging any security or assets. This makes CGSS one of the most founder-friendly funding options, especially for early-stage ventures with limited resources.

2. Credit Guarantee Up to ₹10 Crore

The scheme offers substantial guarantee coverage, helping innovative businesses secure higher loan amounts with confidence. This enables startups to scale operations, expand product lines, or boost working capital without worrying about financial risk.

3. Affordable Guarantee Fee

• Standard Rate: 2% per year
• Concessional Rate: 1.5% for women-led startups and enterprises from the North-East region

These reduced rates make the overall loan cost more manageable and support inclusive entrepreneurship.

4. Multi-Form Credit Support

CGSS covers a wide range of credit facilities, including working capital, term loans, venture debt, and hybrid instruments. This flexibility ensures startups can tailor funding to their unique business needs, from daily operations to long-term expansion.

5. End-to-End Support Through Member Institutions

Member Lending Institutions (MLIs) handle the complete filing, documentation, and approval process. This reduces the administrative burden on founders and ensures faster, smoother loan processing.

6. Focus on Innovation-Driven Ventures

The scheme is specifically designed to back startups with high-growth potential and innovative offerings. This creates a supportive financial ecosystem for technology-driven and impact-focused businesses.

7. Wide Network of Eligible Lenders

Startups can apply through a vast pool of MLIs, including banks, NBFCs, and financial institutions, making the scheme accessible across India.

Eligibility Criteria for CGSS

To apply for the CGSS scheme for startups, the business must meet the following conditions:

• Must be recognised as a DPIIT-registered startup.
• Must be working on innovation, development, improvement of products, or scalable business models.
• Must be evaluated and recommended by a Member Institution (MI) during the loan assessment.
• Should not fall under restricted sectors as notified by the government.

Member Institutions conduct a thorough review of the startup’s business model, projections, and financials before submitting the guarantee application.

Credit Guarantee Coverage Under CGSS

The coverage percentages differ by loan amount:

Loan Amount	Credit Guarantee Coverage
Up to ₹3 crore	80% of default amount
₹3-₹5 crore	75% coverage
Above ₹5 crore	65% coverage

This tiered structure helps lenders reduce risk while offering startup-friendly funding support.

Member Lending Institutions Under CGSS

A wide range of lenders are empanelled under the Startup Credit Guarantee Scheme, including:

• Public & private sector banks
• Small finance banks
• Foreign banks (operating in India)
• Selected Regional Rural Banks
• RBI-registered NBFCs with a minimum net worth of ₹100 crores and credit ratings of BBB or higher
• SEBI-registered Alternative Investment Funds (AIFs)

According to the provisions of the CGSS Scheme, some other financial institutions like the Small Industries Development Bank of India (SIDBI), North Eastern Development Finance Corporation (NEDFI), and National Small Industries Corporation (NSIC) are also acknowledged as empanelled member institutions.

Prerequisites & Compliance Requirements

To participate in this scheme, both startups and lending institutions must follow a few important rules. These requirements help ensure smooth processing, proper verification, and transparent management of the scheme.

KYC Requirements

Every startup must complete basic identity verification (KYC).

• Aadhaar is mandatory for resident partners/directors.
• Passport is mandatory for non-resident partners/directors.

Scheme Governance

The scheme is managed and monitored to ensure fairness and accountability.

• NCGTC (National Credit Guarantee Trustee Company): This body oversees the entire scheme.
• Management Committee: Looks after day-to-day scheme operations and decision-making.
• Risk Evaluation Committee: Ensures there are no conflicts of interest and checks the risk involved in guarantees.

Credit Limit to Member Institutions

Member institutions can offer a guarantee cover of up to ₹500 lakh per startup under their lending portfolios.

How to Apply for the CGSS Scheme Online?

Startups cannot directly apply to the NCGTC portal. Instead, the process is routed through a Member Institution.

Here’s how to CGSS scheme apply online:

Step 1: Approach a Member Institution

Select a bank, NBFC, or AIF empanelled under CGSS.

Step 2: Submit Your Loan Proposal

Provide documents such as business plans, financial statements, projections, and DPIIT recognition documents.

Step 3: Loan Appraisal by the MI

The lender evaluates the proposal and checks the startup’s eligibility for CGSS.

Step 4: MI Applies for Guarantee Cover

If the loan is approved, the MI files a guarantee request with NCGTC.

Step 5: Credit Guarantee Issued

Upon approval, NCGTC grants the guarantee cover to the lender, and the loan is disbursed to the startup.

How to Apply for Startup Loans Under CGSS

To avail of collateral-free startup loans under CGSS, the startup needs to approach an MI or member institution like a bank or RBI-registered NBFC. The startup owner can seek the required credit facility (working capital loan, term loan, etc.) from the MI under CGSS. If the member institution deems the startup eligible post review and the proposed project profitable, then they will apply for the guarantee cover on the NCGTC portal for the loan. Lastly, NCGTC will issue the guarantee scheme cover if all eligibility parameters are fulfilled.

Final Thoughts

The CGSS scheme for startups is one of India’s most impactful steps toward fostering innovation and entrepreneurship. By offering collateral-free funding, flexible credit forms, and strong government-backed guarantees, it gives early-stage businesses the confidence and support they need to scale.

If your startup is exploring alternative or additional financing options beyond CGSS, we, at LendingKart, provide fast, collateral-free MSME loans with quick approvals and flexible repayment plans, making us a strong choice for growing businesses.

To learn more about our offerings, explore our website!

FAQs

1. What is the CGSS loan?

A CGSS loan is a collateral-free loan backed by a government guarantee under the Credit Guarantee Scheme for Startups. It supports DPIIT-recognised startups in obtaining credit from empanelled lenders.

2. How can I apply for the CGSS scheme online?

You must apply through an empanelled Member Institution (bank/NBFC/AIF). The MI submits the guarantee application on your behalf through the NCGTC portal.

3. What is the maximum guarantee amount under CGSS?

Startups can receive a credit guarantee of up to ₹10 crore for eligible loans.

4. What types of loans are covered under CGSS?

The scheme covers working capital loans, term loans, debentures, venture debt, and hybrid credit products.

5. Do I need collateral to apply?

No. CGSS is a 100% collateral-free credit guarantee scheme, enabling startups to borrow without pledging assets