A kind of capital
Credit guarantee
The government stands behind your loan so the lender does not need your house. No cash changes hands — but credit that was refused becomes available.
A credit guarantee pays the lender, not the borrower. A trust or corporation promises to cover an agreed share of the loss if the borrower defaults, which removes the reason a bank asks for collateral in the first place. For a founder whose only pledgeable asset is a family property, this is often the single most consequential programme available.
The mechanics stay in the background: the business applies to a member lender in the ordinary way, and the lender routes the facility through the guarantee scheme. The cost is a fee, usually a small annual percentage of the covered amount, and it is priced against the collateral you no longer have to give.
Because it unlocks money rather than providing it, a guarantee is easy to overlook when reading scheme lists. It belongs on this register because a business that qualifies can borrow when it otherwise could not.
On the register
- CGSSCredit Guarantee Scheme for Startups
Department for Promotion of Industry and Internal Trade
Up to ₹20 croreNon-dilutive