{"id":50051,"date":"2022-10-14T12:00:35","date_gmt":"2022-10-14T06:30:35","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=50051"},"modified":"2022-10-14T13:01:35","modified_gmt":"2022-10-14T07:31:35","slug":"credit-guarantee-scheme-for-startups-2022-explained","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/credit-guarantee-scheme-for-startups-2022-explained\/","title":{"rendered":"Credit Guarantee Scheme for Startups 2022: Explained"},"content":{"rendered":"\n<p>The Credit Guarantee Scheme for Startups has finally\nreceived the approval of the Central Government and is ready to serve aspiring\nentrepreneurs. It aims to render credit guarantees to loans extended by <strong><em>MIs\n(Member Institutions)<\/em><\/strong> to finance qualified startups. Let\u2019s dive into\nthe key aspects of Credit Guarantee Scheme for Startups and discover how\nbeneficial it will be for eligible startups in India. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/credit-guarantee-scheme-for-startups-2022-explained\/#Who_are_Eligible_to_Apply_for_Credit_Guarantee_Scheme_for_Startups\" >Who are\nEligible to Apply for Credit Guarantee Scheme for Startups?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/credit-guarantee-scheme-for-startups-2022-explained\/#Who_can_lend_credit_under_Credit_Guarantee_Scheme_for_Startups\" >Who can lend credit\nunder Credit Guarantee Scheme for Startups?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/credit-guarantee-scheme-for-startups-2022-explained\/#Key_Takeaways_of_Credit_Guarantee_Scheme_For_Startups_2022\" >Key Takeaways of Credit\nGuarantee Scheme For Startups 2022<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/credit-guarantee-scheme-for-startups-2022-explained\/#Norms_around_the_Guarantee_fee_to_be_paid_by_MIs\" >Norms around the Guarantee\nfee to be paid by MIs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/credit-guarantee-scheme-for-startups-2022-explained\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_are_Eligible_to_Apply_for_Credit_Guarantee_Scheme_for_Startups\"><\/span><strong>Who are\nEligible to Apply for Credit Guarantee Scheme for Startups?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>DPIIT recognized startups.<\/li><li>Startups with a stable revenue stream as justified by the audited monthly statements over a year, capable of debt financing<\/li><li>Startups that are not earmarked by the lending\/investing institution as credit defaulters<\/li><li>Startups that are not classified as NPA or Non-Performing Asset as per the<strong> Reserve Bank Guidelines<\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/scripts\/NotificationUser.aspx\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup><\/li><li>Member institutions\u2019 approved startups<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_lend_credit_under_Credit_Guarantee_Scheme_for_Startups\"><\/span><strong>Who can lend credit\nunder Credit Guarantee Scheme for Startups?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the Credit Guarantee Scheme for Startups 2022,\nthe following lending institutions can lend credibility to eligible startups\nacross the country. <\/p>\n\n\n\n<ul><li>Schedule Commercial banks and lending institutions<\/li><li>RBI registered NFBCs or Non-Banking Financial Companies with a minimum net worth of Rs 100 crore and having BBB rating and above given by RBI accredited agency. If some institutions encounter a dip in their rating in the future, they will no longer remain eligible for further guarantee cover. However, once they manage to acquire the desired rating, they can continue granting the same. <\/li><li>SEBI registered AIFs, i.e.<strong> <a class=\"text-primary\" href=\"https:\/\/corpbiz.io\/alternative-investment-fund-registration\">Alternative Investment Funds<\/a><\/strong>.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Takeaways_of_Credit_Guarantee_Scheme_For_Startups_2022\"><\/span><strong>Key Takeaways of Credit\nGuarantee Scheme For Startups 2022<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following are some key takeaways of the Credit Guarantee\nScheme for Startups 2022:<\/p>\n\n\n\n<ul><li>\u200b\u200bThe\nBoard of National Credit Guarantee Trustee Company Limited will serve the role\nof a trustee under the scheme.<\/li><li>The DPIIIT\nwill set up a management committee to oversee the affairs of Trust and MIs to\ncreate a healthy environment for funding.<\/li><li>Under no\ncircumstance, the eligible lending partners ensure guarantee cover against the\nloan granted by them unless they have a trustee\u2019s permission. <\/li><li>The MI\nshall scrutinize credit applications by taking banking review into account.\nAlso, they will keep a close eye on borrower accounts.<\/li><li>The MIs\nshall prioritize the commercial value for proposals seeking financial aid. <\/li><li>MIs must\nadhere to the Trustee\u2019s directions for facilitating recoveries in the guarantee\naccount. <\/li><li>The credit\nrecovery protocol to be followed by MIs should not fall outside the ambit of\nthe Trustee&#8217;s directions.<\/li><li>MIs must\nrespect the interest of the Trust and the borrowers and should follow an\nunderline protocol before ensuring the guarantee cover. <\/li><li>The\nTrustee can inspect the copies of the book of account and records of MI and the\nborrower. Such inspection will be carried out by a designated officer. <\/li><li>Under an\numbrella-based guarantee, updates about the portfolio\u2019s performance shall be\nshared by the Venture debt fund every quarter. <\/li><li>The MIs\nshall share a Management Certificate with the Trust within three months of the\nclose of the fiscal year. The said certificate should reflect the cumulative\noutstanding and outstanding Non-Performing Assets. Failure to do so can refrain\nthem from extending the guarantee cover. <\/li><li>The MI\nmust share their effort about recovery and realizations with the Trustee, as\nand when demanded. <\/li><li>The late\nrecovery of credit and deferred payment to trust will be subjected to monetary\npenalties in the form of interest.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Norms_around_the_Guarantee_fee_to_be_paid_by_MIs\"><\/span><strong>Norms around the Guarantee\nfee to be paid by MIs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following are some norms around\nthe Guarantee fee to be paid by MIs:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong><em>For Transaction-based guarantee cover: <\/em><\/strong><\/h3>\n\n\n\n<ul><li>To secure\nthe guarantee cover, the MIs shall pay AGF (Annual Guarantee Fee) of 2 percent\nof the outstanding\/disbursement amount to the Trust from the date of CGDAN\n(Credit Guarantee Demand Advice Note) of the guarantee fee. <\/li><li>For\nstartups in Northeast regions and units handled by female entrepreneurs, the\nMIs shall pay AGF of 1.5 percent of the outstanding\/disbursement amount to the\nTrust from the date of CGDAN, i.e. Credit Guarantee Demand Advice Note of\nguarantee fee. <\/li><li>The\nestimation of upcoming AGFs would be based on the outstanding loan\/venture debt\nat the commencement of the FY and additional grant made during the first and\ncoming years out of the overall approved amount on a pro-rata basis. <\/li><li>The\ncommencement of the guarantee would come to life on the day when the MIs credit\nAGF\u2019s proceeds to the Trust\u2019s bank account. <\/li><li>The AGF\nrenewal would come into effect only after the MIs payout required amount to the\nTrust\u2019s bank account. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong><em>For Umbrella-based guarantee cover: <\/em><\/strong><\/h3>\n\n\n\n<ul><li>To secure\nthe guarantee cover, the MI shall pay a fee in the form of ACC, i.e. Annual\nCommitment Charge of 0.15 percent of the intended pooled investment in the\nstartup to Trust within thirty days from the date of\nCGDAN, i.e. Credit Guarantee Demand Advice Note of the commission charge. An\nadditional guarantee fee should be paid on time whenever the proposed\ninvestment threshold is extended to what was proposed earlier. <\/li><\/ul>\n\n\n\n<ul><li>The\nestimation of imminent ACCs shall be based on the pooled investment in startups\nof VDF and for guarantee cover, MIs should pay the ACC within thirty days on or\nbefore Apr 30, of every year till the entire tenure of VDF. ACCs remitted by\nthe Venture Debt Fund are non-refundable. <\/li><\/ul>\n\n\n\n<ul><li>Member\ninstitute shall pay one percent of the pooled investment as one-time guarantee\nfees at the time of request of a guarantee claim. If MI doesn\u2019t entertain any\nclaim, it shall pay 0.25 percent of the pooled investment as a guarantee of\nclosure expenses within thirty days of the closure date of VDF. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Credit Guarantee Scheme for Startups 2022 can be a significant boost to the startup ecosystem. The scheme will expedite the influx of new business ideas that need funding to flourish. It\u2019s a welcome step from GOI to provide much-needed financial bolster to financially aggrieved startups. The scheme has enough potential to create a viable and transparent funding environment for startups. <\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Credit Guarantee Scheme for Startups has finally received the approval of the Central Government and is ready to serve aspiring entrepreneurs. It aims to render credit guarantees to loans extended by MIs (Member Institutions) to finance qualified startups. Let\u2019s dive into the key aspects of Credit Guarantee Scheme for Startups and discover how beneficial [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":50069,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[968],"tags":[],"acf":{"service_id":"250"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3834,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/50051"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=50051"}],"version-history":[{"count":4,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/50051\/revisions"}],"predecessor-version":[{"id":50056,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/50051\/revisions\/50056"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/50069"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=50051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=50051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=50051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}