Scheme of loan guarantee for Startaps 2025: What is it? Criteria to meet the conditions and the application procedure!

CGSS (a loan guarantee scheme) expanded with the approval of the Indian government; DPIIT announced an extension today. With the expansion, DPIIT also revised a scheme for better opportunities and support for entrepreneurs.

The revised scheme brings a double guarantee of ₹ 20 crowns for the borrower from the initial cover of 10 crowns. In order to support the Startaps, the Government also reduced its annual guarantee fee, expanded the volume scope and made numerous other adjustments.

Changes in CGSS will be in effect from May 08, 2025. According to the DPIIT notice. The scheme, which was started in 2022 to support the initiative of Startup India and make India a place where startups can grow and innovate.

Revised scheme

The India’s Government has expanded the CGSS 2022 scheme and has brought some important changes that will reduce the risk of investment on startap and help the startup infrastructure to grow in India. The new changes in the scheme that every entrepreneur should know are mentioned below:

• The government has doubled the maximum guarantee of each borrower from ₹ 10 crowns to ₹ 20 crowns, which means that it will be the greatest financial protection that any startup will receive.
• The government also increased the cover for non -payment of loan, as now for the borrower with up to ₹ 10 crowns of loans, the government will cover 85% of the given amount, while with loans above ₹ 10 crowns will reduce to 75%.
• In order for the investment to be more attractive to certain sectors and the start of launching launch, the Government also reduced the AGF (annual warranty fee) for companies in 27 champion areas recognized under “Make in India” from 1% to 2%.
• In addition, the updated plan would reduce the risks associated with the financing of startups, which will encourage banks to support their experimentation, research and development and creation of innovative technologies.

Eligibility for borrowers

According to the CGSS scheme, if any startup wants to use help with a scheme, they should meet the following conditions:

• Startups should be approved and recognized by DPIIT according to the updated Gazette notification.
• The startups should receive recognition, and their eligibility should be certified for warranty coverage by the institution of members.
• Startups should not have an unpaid status with any investment/ borrowing institutions, and should not be recognized as assets that do not act according to RBI rules.
• Companies that have achieved the stable phase of revenue flow and qualified to finance debt, which is determined by revised monthly statements over a 12 -month period

Enterprise/investment institutions

According to CGSS, the government only allows those institutions of investment/ borrowing that meet the following conditions of eligibility:

• Institutions of lending/ investment should be financial institutions and scheduled commercial bank.
• Institutes should be registered on themselves as alternative investment funds (AIFS);
• The institution must have a minimum net value of 100 crowns, be registered with RBI and have an external rating of the BBB or more credit rating agency. It should be noted that if NBFC loses its eligibility later because its credit rating falls below the BBB, he will not be able to obtain additional guarantee coverage until he once again upgrades the category of acceptable.

Application procedure

Startups who want to take advantage and get the necessary support for the growth of their startups can apply for CGSS in the following steps:

• Initially, your company should be recognized by DPIIT. You can sign up for DPIIT recognition by registration on the India page.
• You should prepare documents you will need to fix your help approval, such as a business plan, 12 months of financial report, PAN card, GST registration, etc.
• You now have to access a qualified and approved institution/ institution for borrowing participating in the scheme to obtain credit support.
• The institutions of members will evaluate and evaluate your business or project, and after considering acceptable, they will apply to the NCGTC portal to get a guarantee.
• Once this is done, sign up for the CGSS loan on the CGSS portal with all the necessary documents and the appropriate plan of using the funds.
• After completing the CGSS loan request, the administration will inspect it; If accepted, your loan request will be completed and the NCGTC (National Commissioner Commissioner for Credit Guarantee) will guarantee a lender on your behalf.

The expansion of CGSS will support the Startaps and reduce risk borrowers in investing in new business ideas, causing a culture of startup to India, which will eventually increase the national economy.