The proposed credit guarantee fund that will help startups get collateral-free loans is likely to get the cabinet nod in July.

The fund, with a total corpus of Rs 2,000 crore, was announced in January 2016 by Prime Minister Narendra Modi to enable greater financial support for startups.

“We have finalised the guidelines for the funds. Each startup will be eligible for up to Rs 5 crore loan without any collateral,” Ramesh Abhishek, secretary, Department of Industrial Policy and Promotion (DIPP), said at the launch of startup hub on June 19. Access to capital has been one of the biggest challenges faced by startups.

Startups will have to meet the definition set by the DIPP to access any of the benefits announced in the Startup India Action Plan last year, including access to the loans under the credit guarantee scheme.

So far, 1,333 startups have been recognised by DIPP. A ‘fund of funds’ of Rs 10,000 crore, managed by SIDBI, has committed Rs 623 crore to alternate investment funds and funded 65 startups.

The start-up hub seeks to strengthen the startup ecosystem in the country by bringing together start-ups, angel investors and incubators on one common online platform. Inaugurating the startup hub, commerce and industry minister Nirmala Sitharaman said the government would soon host a startup exchange programme between the South Asian Association for Regional Cooperation (Saarc) countries.

“Mutually beneficial ideas can be exchanged as there is a lot of complementarity between the countries. We want to create better synergies through government to government interactions,” Sitharaman said.

The Minister also said the government is reflecting upon the inputs received from the startup sector on improving processes. “We want our engagement to be dynamic… We have changed our procurement policies to create niche openings for startups,” he added.

Source: Economic Times