Schemes And subsidies For Startup

Subsidies For Startup

Scheme1: Seed Fund Scheme

1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.

2. Startup must have a business idea to develop a product or a service with market fit, viable commercialization, and scope of scaling

3. Startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted.

4. Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles, etc.

5. Startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility

1. Incubator should be operational for at least two years on the date of application to the scheme

2. Incubator must have facilities to seat at least 25 individuals

3. Incubator must have at least 5 startups undergoing incubation physically on the date of application

4. Incubator must have a full-time Chief Executive Officer, experienced in business development and entrepreneurship, supported by a capable team responsible for mentoring startups in testing and validating ideas, as well as in finance, legal and human resources functions

5. Incubator should not be disbursing seed fund to incubatees using funding from any third-party private entity

Experts Advisory Committee (EAC) shall evaluate incubators for grant assistance. A Grant of up to Rs. 5 (five) crore would be provided to a selected incubator in milestone-based three (or) more installments. The exact quantum of grant and instalments for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation

A component of Management Fee @ 5% of Seed Fund grant to the incubator will be provisioned (i.e. if an incubator is granted Rs. 1 crore of Seed Fund, then by including management fee @ 5%, the total assistance would be Rs. 1.050 crore)

Subsidies For Startup

Scheme 2: Credit Guarantee Scheme for Startups (CGSS)

The broad objective of CGSS is to provide guarantee upto a specified limit against credit instruments extended by Member Institutions (MIs) to finance eligible Startups. This scheme would help provide the much needed collateral free debt funding to Startups.

Eligible borrower

The eligibility criteria for an entity to borrow under the Credit Guarantee Scheme for Startups shall be as follows, wherein an entity should be: i. Startup as recognized by DPIIT as per Gazette Notifications issued from time to time, and ii. Startups that have reached stage of stable revenue stream, as assessed from audited monthly statements over a 12 month period, amenable to debt financing, and iii. Startup not in default to any lending/investing institution and not classified as Non-Performing Asset as per RBI guidelines, and iv. Startup whose eligibility is certified by the member institution for the purpose of guarantee cover.

i. Credit guarantee cover under this model would be either transaction based or umbrella based.

ii. AIFs shall not be eligible to avail transaction based guarantee cover under the scheme.

iii. In respect of transaction-based guarantee cover, the guarantee cover will commence from the date of payment of guarantee fee and shall run through the agreed tenure of the Loan/debt facility.

iv. In respect of umbrella-based guarantee, the cover is based on the Pooled Investment in Startups. The guarantee cover will commence from the date of payment of commitment charges and shall run through the life of the VDF provided the borrowers being covered are eligible for coverage under the scheme and commitment charges are paid from the first year of operations of VDF annually till its closure

Ceiling on guarantee cover i. Maximum guarantee cover per borrower shall not exceed Rs.10 crore

For transaction-based guarantee cover

The Trust shall provide guarantee cover, subject to a maximum of Rs.10 crore per borrower, as per details given below: i. to the extent of 80% of the amount in default if the original loan sanction amount is upto Rs.3 crore ii. to the extent of 75% of the amount in default if the original loan sanction amount is above Rs. 3 crore and upto Rs. 5 crore iii. to the extent of 65% of the amount in default if the original loan sanction amount is above Rs. 5 crore.

For umbrella-based guarantee cover

The Trust shall provide guarantee cover of actual losses or upto a maximum of 5% of Pooled Investment on which cover is being taken from the fund in Startups, whichever is lower, subject to a maximum of Rs.10 crore per borrower.

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