Startup India Loan Scheme Extended: Now Avail Collateral-Free Loans up to 20 Crores

Startup India Loan Scheme Extended: Now Avail Collateral-Free Loans up to 20 Crores

In a major boost for Indian startups, the Startup India Loan Scheme has undergone a significant upgrade. As announced in Budget 2025, the government has increased the collateral-free loan limit from ?10 crore to ?20 crore under the Credit Guarantee Scheme for Startups.

This move is aimed at empowering startups with higher funding access without the need to mortgage assets — a true gamechanger for innovation-driven enterprises in India.

What is the Startup India Loan Scheme?

The Startup India Loan Scheme, supported by the Credit Guarantee Scheme for Startups (CGSS), is designed to help eligible startups get bank loans without offering any collateral. The government offers a credit guarantee cover to banks for loans extended to startups, which reduces the risk for lenders and improves loan accessibility for entrepreneurs.

Earlier, the maximum loan amount covered under this guarantee was ?10 crore. Now, it has been doubled to ?20 crore, expanding opportunities for startups seeking higher capital for business expansion.

Key Highlights of the New Changes

• Collateral-Free Loan Limit Raised:
  Startups can now access loans up to ?20 crore without providing any collateral, backed by government guarantees.
• Lower Guarantee Fee for Focus Sectors:
  For 27 identified focus sectors, the guarantee fee has been reduced to just 1%, making it even more attractive for innovative startups to borrow.
• Better Bank Confidence:
  Banks are more likely to approve large loan amounts now that the entire amount up to ?20 crore is backed by government guarantees.

Which Startups Can Benefit?

Not every startup is eligible for this upgraded guarantee scheme. The following criteria must be met:

The startup must be DPIIT-recognized (registered with the Department for Promotion of Industry and Internal Trade).

The startup should have a stable revenue history in the last financial year.

Startups operating in any of the 27 focus sectors will enjoy a lower guarantee fee.

What Are the 27 Focus Sectors?

These sectors have been identified as critical for India’s self-reliance and innovation goals under Atmanirbhar Bharat. Some of the sectors include:

• Artificial Intelligence (AI)
• Clean and Green Energy
• Manufacturing
• Biotechnology
• Aerospace and Space Technology
• Electronics
• Agriculture Tech
• Renewable Energy Solutions
• The full list can be accessed via DPIIT or Startup India’s official portal.

Example Scenario

Let’s say a tech startup based in Bengaluru, already DPIIT-recognized, has shown steady revenues in the last year. The founders now want to raise ?15 crore to expand operations. Earlier, the government guarantee would cover only ?10 crore, and banks would ask for collateral for the remaining ?5 crore. Now, with the new policy, the entire ?15 crore loan can be backed by the government — zero collateral required. This boosts lender confidence and makes funding smoother and faster.

FAQs 

Q1. What is the new loan limit under Startup India Loan Scheme?

Ans: The loan limit has been increased from ?10 crore to ?20 crore under the government’s Credit Guarantee Scheme.

Q2. Is collateral required to get a 20 crore loan?

Ans: No. If the startup meets eligibility criteria, it can access up to ?20 crore without offering any collateral.

Q3. Who is eligible for this scheme?

Ans: DPIIT-recognized startups with a stable financial track record in the previous financial year are eligible.

Q4. What are the focus sectors with reduced guarantee fees?

Ans: Focus sectors include AI, manufacturing, space tech, green energy, biotech, and others. Startups in these sectors will pay only 1% guarantee fee.

Q5. Will banks still check the creditworthiness of the startup?

Ans: Yes. While the government provides a guarantee, banks will still assess your credit profile and business model before sanctioning the loan.

Q6. Where can I register as a DPIIT-recognized startup?

Ans: Visit the official Startup India Portal and complete the DPIIT recognition process online.

Final Thoughts

The increase in the loan guarantee limit from 10 crore to ?20 crore is a bold step to fuel the Indian startup ecosystem. By reducing the need for collateral and offering lower fees in focus sectors, the government has made it significantly easier for startups to access capital and scale up their operations.

To stay updated on such valuable financial reforms and business-friendly policies, follow FinanceSeva — your trusted guide for funding, taxation, and entrepreneurial growth.