Credit Guarantee Scheme for Startups (CGSS) 2026 Guide

The Credit Guarantee Scheme for Startups (CGSS) lets DPIIT-recognised startups borrow from banks, NBFCs and venture debt funds without collateral, because the government's trust company guarantees most of the lender's loss if the loan goes bad. As of October 2026 the scheme is active: cover is available up to ₹20 crore per borrower, at 85% of the default amount for loans up to ₹10 crore and 75% above that. It is not a subsidy and not interest-free, but it is the main central route for debt funding now that the seed fund scheme is closed.

What CGSS is and who runs it

CGSS was notified on 6 October 2022 by the Department for Promotion of Industry and Internal Trade (DPIIT). The National Credit Guarantee Trustee Company (NCGTC), a Ministry of Finance company, is the trustee that issues the guarantees.

In May 2025 the government notified an expansion:

• maximum cover per borrower raised from ₹10 crore to ₹20 crore;
• annual guarantee fee cut to 1% for loans to startups in 27 champion sectors (from 2%).

The guarantee is given to the lender (member institution), not to you. You apply for a loan in the normal way; the lender decides whether to cover it under CGSS.

Key terms at a glance (October 2026)

If the lender takes some collateral anyway, the guaranteed amount is reduced by the value of that collateral, so most lenders lending under CGSS do not insist on it.

Eligibility

Startup conditions

• DPIIT recognition. Recognition is free on the Startup India portal. Under the February 2026 notification, a company or LLP counts as a startup for 10 years from incorporation if turnover never crossed ₹200 crore (20 years and ₹300 crore for recognised deep-tech startups).
• No default to any lender or investor, and the account must not be an NPA as per RBI norms.
• Eligibility certified by the lender, which also does its own credit appraisal.

What lenders add on top

Banks layer their own rules over the scheme. Bank of Baroda's CGSS page, for example, asks for a stable revenue stream assessed from 12 months of statements and a minimum internal rating, and excludes real estate projects and HUFs. Expect a lender to check:

• audited financials and GST returns, with a revenue trend;
• the founders' and the company's credit reports (see CIBIL MSME Rank (CMR));
• cash flow cover for the EMI and existing debt;
• cap table, shareholder agreements and use of funds.

A pre-revenue startup will rarely get a bank term loan even with a guarantee; venture debt funds registered as AIFs are the more realistic CGSS lenders at that stage, usually alongside an equity round.

Documents usually needed

• DPIIT recognition certificate
• Certificate of incorporation, MoA/AoA or LLP agreement, board resolution for borrowing
• PAN of the company and KYC (PAN, Aadhaar) of directors or partners
• Udyam registration and GST registration where applicable
• Audited financial statements, provisional figures for the current year, GST returns and 12 months of bank statements
• Business plan or project report with projected cash flows
• Cap table and details of existing loans
• Sector proof if you are claiming the 1% champion-sector fee

Step-by-step: how to apply

1. Get DPIIT recognition on the Startup India portal if you have not already.
2. Shortlist lenders. The member institution list is published on the Jan Samarth portal and the NCGTC website. Startup India's CGSS page names banks such as Axis Bank, Bank of Baroda and HDFC Bank among them.
3. Apply online on Jan Samarth (jansamarth.in) under the CGSS option, or visit the startup/MSME desk of a member bank's branch.
4. Lender appraisal. The lender assesses viability, credit history and cash flow, and decides on the limit, rate and tenure.
5. Sanction and guarantee. On sanction, the lender applies to NCGTC for cover through its portal. For eligible loans the guarantee is automatic once the parameters are met.
6. Disbursement and fee. The lender pays the annual guarantee fee to NCGTC and will usually recover it from you; ask for this in writing in the sanction letter.

Applications are free. No agent can "get CGSS sanctioned" for a fee.

Worked example: cost and protection on a ₹4 crore loan

A DPIIT-recognised electronics startup in a champion sector borrows ₹4 crore as a 5-year term loan at an illustrative 12% interest.

EMI and interest

• EMI = P × r × (1 + r)^n / [(1 + r)^n − 1], r = 0.01, n = 60
• ₹4,00,00,000 → EMI about ₹8,89,778 a month
• Total interest: ₹8,89,778 × 60 − ₹4,00,00,000 = about ₹1,33,86,674

Guarantee fee in year 1 (on the ₹4 crore amount)

The fee is generally calculated on the outstanding term loan (or sanctioned working capital limit), so it falls as you repay.

What the guarantee covers

If the startup defaults with ₹2.5 crore outstanding, NCGTC pays the bank up to 85% of the amount in default, about ₹2.125 crore, under the terms of the scheme. The startup still owes the full ₹2.5 crore: the bank continues recovery, and the default goes on the company's credit report. The guarantee protects the lender, not the borrower.

Check what EMI your cash flow can carry in the EMI calculator before you agree to a limit.

Common reasons CGSS loans are declined

• No or unstable revenue. Banks rarely lend against projections alone.
• Existing default, settlement or NPA in the company's or promoters' history.
• DPIIT recognition lapsed (crossed the age or turnover limit).
• Lender not a member institution, or the lender's internal rating cut-off not met.
• Over-leverage: existing loans or ECLGS dues already strain cash flow; some banks ask you to close earlier guaranteed loans first.
• Excluded activity under the lender's policy, such as real estate.

How to complain

1. Lender first. Write to the branch and then the bank's grievance redressal officer, quoting your application reference. Ask for the reason for rejection in writing.
2. RBI Integrated Ombudsman. If a bank or NBFC does not resolve a complaint about service, charges or delays within 30 days, file at cms.rbi.org.in.
3. Scheme issues. Raise scheme-level problems (for example, a lender wrongly saying CGSS does not exist) with DPIIT through the Startup India portal, or on CPGRAMS (pgportal.gov.in).
4. Fraud. Report fake "CGSS loan" calls or websites asking for upfront fees at cybercrime.gov.in or 1930.

For smaller needs, the Mudra and CGTMSE routes may be faster; see our comparison of government business loan schemes and the pillar guide on business loans and Mudra loans.

Key takeaways

• CGSS is active in October 2026 and guarantees loans to DPIIT-recognised startups up to ₹20 crore per borrower.
• Cover is 85% of the default amount for loans up to ₹10 crore and 75% above that; it protects the lender, not you.
• The annual guarantee fee is 1% for 27 champion sectors, 1.5% for women entrepreneurs and North East units and 2% for others, usually passed to the borrower.
• Interest is at the lender's rate; there is no subsidy.
• Apply on Jan Samarth or at a member bank; NCGTC deals only with the lender.