Credit guarantee for Startups: Rs 5 Crore loan without collateral on the anvil

Credit guarantee for Startups: Rs 5 Crore loan without collateral on the anvil

Posted by P. Charitha on March 14th 2017

 
According to an Economic Times report start-ups will soon be able to take loans of up to Rs 5 crore without collateral through a credit guarantee scheme prepared by the government. 
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India (GoI) in August 2000 to make available collateral-free credit to the micro and small enterprise sector under a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) . Both the existing and the new enterprises are eligible to be covered under the scheme. 
 
The scheme is currently awaiting cabinet approval and is likely to become functional soon under the supervision of the Department of Industrial Policy and Promotion. The scheme will help address the most basic challenge of start-ups: access to capital. The corpus of the fund will also be guaranteed by the government and the government is looking at ways to increase availability of finance to start-ups. 
The department had invited suggestions from stakeholders including start-ups, venture capital funds and angel investors on ways to increase availability of credit for start-ups.
 

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