StartUp - #SectorUpdates

The Government has notified a credit guarantee scheme for start-ups (CGSS) under which lenders will extend collateral-free loans up to Rs 10 crore to each eligible borrower. The credit guarantee cover under the scheme would be “transaction-based” and exposure to individual cases would be capped at 10 crore rupees per case or the actual outstanding credit amount, whichever is less. The loans will be backed by a sovereign guarantee. Loans or debt facilities sanctioned to an eligible startup on or after October 6 can be covered under the scheme. The move is likely to support startups that are hit hard by the pandemic and are now going to be impacted further by the rising interest rate scenario when liquidity is unlikely to be easily available to new entrepreneurs. According to some estimates, funding for startups sharply decreased, from USD 4.6 billion in January 2022 to USD 885 million in August.

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