What is Credit Guarantee Scheme and Seed Funds For Startups?

What is credit guarantee scheme and seed funding for startups

What is Credit Guarantee Scheme and Seed funds for Startups?

Answer:

  1. Government backed Credit scheme to solve credit related problems for early stage startups in India

 

What is Difference Between Credit Guarantee Scheme and Seed funds for Startups?

Answer:

    1. Credit Guarantee Scheme are the credit loans for startups given to fulfill for working capital shortfalls.

whereas

  1. Seed Funds are credit given to startups which are in ideation to proof of concept stages.

 

Which department is to launch this scheme?

Answer:

  1. DPIIT (Department for Promotion of Industry and Internal Trade)
  2. formerly was known as: DIPP (Department of Industrial Policy & Promotion)

 

How much amount of fund will be used for the scheme?

Answer:

  1. The Department has not yet clarified the exact amount of fund that will be available for the credit scheme.

 

Why was this scheme required?

Answer:

  1. Realising the fact that most startups literally face problems to raise fund or finance at the early stage and need to solve the problem
  2. This scheme is part of larger Roadmap of the government of India to develop better startup ecosystem in India.
  3. Ease of doing business and attracting foreign investments

 

Which States or union territory will have access to this scheme?

Answer:

  1. The Credit Scheme form DPIIT will available nation-wide pan India.
  2.  It is also called as National Credit Seed Fund as implied
  3. by DPIIT Secretory Guruprasad Mohapatra.

 

How this fund will be available for Startups?

Answer:

  1. Government does not directly invest or finance the startups.
  2. The funds will be made available to banks.
  3.  Banks will let the funds to be utilised by the startups as per the scheme.

 

When this scheme will be available?

Answer:

  1. The scheme has yet to get the approval from the finance ministry.
  2. Once the approval is granted, DPIIT will have to get the green signal from Union Cabinet.

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