CGSS for Startups (2026): Eligibility, ₹20 Crore Cover, Fees & How to Apply
CGSS can support up to ₹20 crore of eligible startup debt through member lenders—but it is a guarantee for the lender, not a grant or loan waiver. Check the 85%/75% cover, current DPIIT rules, fees, documents and application route.
CGSS can support up to ₹20 crore of guarantee cover per eligible borrower. The money still comes from a bank, eligible NBFC, financial institution or venture-debt fund—and the startup remains responsible for repaying the full debt.
NCGTC guarantees a defined part of the member institution's eligible loss. It does not transfer ₹20 crore to the startup, waive the loan after default or require a lender to approve a weak proposal.
1. What CGSS actually does
The Credit Guarantee Scheme for Startups helps DPIIT-recognised startups seek debt without having to provide additional collateral for the entire facility. The Department for Promotion of Industry and Internal Trade operates the scheme through the National Credit Guarantee Trustee Company Limited (NCGTC).
The guarantee sits behind the lender. You apply for credit to a member institution; that institution appraises the business, sanctions the facility and seeks the guarantee. If the account later defaults, an eligible claim is paid to the institution—not to the startup.
Government-backed guarantee
Limited protection for an eligible member institution.
Commercial lender decision
The lender still decides viability, pricing and sanction.
Full borrower liability
A paid claim does not cancel the startup's debt.
2. Which startups can seek CGSS-backed debt?
The scheme starts with three borrower tests. The entity must be recognised by DPIIT, must not be in default to any lending or investing institution or classified as an NPA under RBI rules, and must be certified as eligible by the member institution.
Standard DPIIT-recognised startup
- Private limited company, registered partnership, LLP or eligible cooperative society
- Within 10 years of incorporation or registration
- Turnover not exceeding ₹200 crore in any financial year
- Innovation, improvement or a scalable model with employment or wealth-creation potential
- Not formed by splitting up or reconstructing an existing business
Recognised DeepTech startup
- Within 20 years of incorporation or registration
- Turnover not exceeding ₹300 crore in any financial year
- Solution built on scientific or engineering advancement
- Meaningful R&D intensity and novel intellectual property
- Long gestation, capital intensity or material technical uncertainty
DPIIT recognition opens the door to CGSS, but the lender still has to accept the business case, repayment capacity and proposed facility under its credit policy.
3. How much of the debt is covered?
The answer depends on the lending route. Banks, financial institutions and eligible NBFCs use transaction-based cover. A SEBI-registered AIF or venture-debt fund uses umbrella-based cover for a pool of startup investments.
Loan up to ₹10 crore
Transaction-based coverBank / FI / eligible NBFC
85% of amount in default
Loan above ₹10 crore
Transaction-based coverBank / FI / eligible NBFC
75% of amount in default
Portfolio of startup investments
Umbrella-based coverSEBI-registered AIF / VDF
Actual losses or 5% of pooled investment, whichever is lower
The guarantee-cover ceiling applies per borrower. If multiple institutions fund the same startup, the available cover is shared within that overall ceiling.
If the lender accepts partial additional collateral, the guarantee is limited to the outstanding unsecured portion after deducting the collateral value.
Example: cover applies to the amount in default
| Original loan | ₹8.00 crore |
| Amount in default | ₹6.00 crore |
| Applicable cover rate | 85% |
| Potential eligible guarantee claim | ₹5.10 crore |
The 85% is applied to the ₹6 crore amount in default, not automatically to the original ₹8 crore sanction. A claim would go to the lender, while the startup would remain liable for the full outstanding debt and recovery would continue.
- The same credit facility cannot also be covered under another guarantee scheme.
- The lender can create a charge over assets financed by the facility; this is primary security, not the same as additional collateral.
- The revised framework applies to eligible facilities sanctioned on or after 8 May 2025 and remains in force until further DPIIT notification.
4. Annual guarantee fee and loan terms
For transaction-based cover, the member institution pays an annual guarantee fee to NCGTC. These are scheme-level rates for the institution—not a published promise that every startup will see the same borrower-side charge.
Standard transaction-based cover
2% p.a.Disbursed / outstanding amount; sanction amount for working-capital and non-fund-based facilities
Women entrepreneurs or North-East units
1.5% p.a.Same transaction-based calculation basis
Units in the 27 Champion Sectors
1% p.a.Same transaction-based calculation basis
Umbrella cover uses a fund-level annual commitment charge of 0.15% of proposed pooled startup investment. The framework also provides for a one-time 1% fee when a claim is invoked, or a 0.25% closure charge if no claim is made. These are not standard borrower-facing loan charges.
No scheme-level interest cap
The lender sets interest, tenure, moratorium and processing fees under its policies.
Ask for the all-in cost
Request a written term sheet showing interest, processing charges, security, covenants and any guarantee-fee recovery.
5. Who can lend, and what debt can be covered?
Eligible member institutions include scheduled commercial banks and qualifying financial institutions, RBI-registered NBFCs with at least ₹100 crore net worth and a BBB-or-higher eligible rating, and SEBI-registered AIFs.
Eligible debt instruments
- Working-capital facilities
- Term loans and other fund-based credit
- Venture debt
- Subordinated or mezzanine debt
- Debentures and optionally convertible debt
- Non-fund-based facilities once they crystallise as debt
- A universal minimum or maximum interest rate
- A fixed repayment tenure or moratorium
- A standard processing charge
- A single document list for every lender
- Approval merely because the startup is DPIIT-recognised
6. How to apply for CGSS-backed startup debt
A startup can begin online through Jan Samarth or approach a participating member institution directly. The important distinction is that the startup applies for finance; the institution applies to NCGTC for the guarantee.
Five-step application route
- 01Obtain DPIIT recognitionApply through the National Single Window System if the entity is not already recognised. CGSS is available only to eligible DPIIT-recognised startups.
- 02Choose a participating routeApply through Jan Samarth where available, approach a registered member institution directly, or visit a participating branch.
- 03Submit a lender-ready proposalExplain the business model, funding requirement, use of funds, projected cash flow, repayment plan and existing borrowings.
- 04Complete the lender's appraisalThe member institution independently tests viability, repayment capacity, promoter profile, compliance and its normal credit-policy conditions.
- 05Lender sanctions and seeks coverAfter sanction and disbursement reporting, the member institution—not the startup—applies to NCGTC and pays the applicable guarantee fee.
7. Documents to prepare before approaching a lender
CGSS does not prescribe one universal borrower checklist. The institution can request additional legal, security, sector or promoter documents, but the following pack will cover the usual first round.
Entity and promoter documents
- DPIIT Startup Recognition Certificate
- Certificate of incorporation, LLP or partnership documents
- PAN, GST registration and business-address proof, where applicable
- Promoter, director, partner and beneficial-owner KYC
- Board or partner resolution authorising the borrowing
Financial and proposal documents
- Audited financial statements and latest management accounts
- Recent bank statements and existing borrowing details
- Business plan, pitch deck or detailed project report
- Revenue, cash-flow and repayment projections
- Quotations, capex plan and a clear schedule for use of funds
Tie every rupee requested to a use, every use to a business milestone and every repayment to a realistic cash-flow source. A clean funding narrative often matters more than a longer pitch deck.
8. Why an otherwise eligible proposal may still be rejected
Eligibility is a gateway, not a credit decision. Prepare for the lender to test downside cash flow, promoter conduct, customer concentration, existing leverage and the path to repayment.
Weak repayment visibility
Ambitious revenue projections without customer evidence, margins or a realistic cash runway make appraisal difficult.
Unclear use of funds
A broad request for “growth capital” is weaker than a costed plan linked to inventory, equipment, hiring or specific milestones.
Existing stress or overdue debt
A startup in default to a lending or investing institution, or classified as an NPA, does not meet the borrower conditions.
Treating the guarantee as approval
CGSS reduces part of the lender's risk; it does not replace credit appraisal, promoter diligence or viable unit economics.
Ignoring total borrowing
The ₹20 crore ceiling applies per borrower, and facilities from multiple member institutions consume the available cover.
Assuming every charge is fixed
Interest, tenure, moratorium and processing charges are lender-specific. Ask for a written term sheet and full cost breakup.
9. CGSS questions founders usually ask
Is CGSS a government loan, grant or subsidy?
No. A bank, financial institution, eligible NBFC or SEBI-registered AIF provides the debt. CGSS gives the member institution a limited guarantee against eligible losses; the startup still has to repay the full debt under its loan documents.
Can a startup apply directly to NCGTC for CGSS cover?
No. The startup approaches a participating member institution, including through Jan Samarth where available. The lender appraises and sanctions the proposal, then applies to NCGTC for guarantee cover.
Does the ₹20 crore limit mean the government pays ₹20 crore to the startup?
No. ₹20 crore is the maximum guarantee-cover ceiling per borrower under the scheme. For transaction-based cover, the claim is linked to 85% or 75% of the amount in default, subject to the scheme ceiling and collateral adjustments.
Is CGSS completely collateral-free?
The scheme is designed to support collateral-free debt, but a lender can take primary security over assets created from the loan. If partial additional collateral is accepted, only the unsecured portion is considered for guarantee cover.
Is there a fixed or subsidised interest rate under CGSS?
No. CGSS does not prescribe an interest-rate cap. Interest, tenure, moratorium, processing charges and other commercial terms are decided by the member institution under its policies.
Who pays the annual guarantee fee?
The member institution pays the annual guarantee fee to NCGTC. The scheme does not standardise whether or how a lender may reflect that cost in its pricing, so the startup should ask for a written breakup of all charges.
Does payment of a guarantee claim cancel the startup's debt?
No. A claim is paid to the member institution and does not release the startup from its repayment liability. The lender must continue recovery action for the entire outstanding amount.
Can the same facility be covered under CGSS and another guarantee scheme?
No. The credit facility proposed for CGSS cover must not already be covered under another guarantee scheme. The NCGTC FAQ specifically says an ECLGS loan must be closed if the borrower wants to avail CGSS.
What are the current DPIIT recognition limits?
For a standard startup, the current recognition limits are up to 10 years from incorporation or registration and turnover not exceeding ₹200 crore in any financial year. For a recognised DeepTech startup, the corresponding limits are 20 years and ₹300 crore.
Does being eligible guarantee loan approval?
No. The member institution must independently assess commercial viability, cash flow, promoter profile, repayment capacity and compliance with its credit policy. CGSS eligibility does not require a lender to sanction the proposal.
10. Sources and current-status note
This guide was reviewed against primary government material on 30 July 2026. Scheme parameters, member institutions and lender requirements can change, so confirm the current position before submitting an application.
Primary sources
Work out the facility size, repayment capacity and documentation gaps before you approach the lender.
Educational information only. Final eligibility, sanction, pricing, security and documentation depend on the member institution and the applicant's facts.
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