Government doubles loan guarantee cap under startup credit scheme

The Indian government has doubled the loan guarantee cap under the Startup India scheme to INR 20 crore per borrower while reducing interest rates by 1.5%. The enhanced limits apply to DPIIT-recognized startups across manufacturing, agritech and healthtech sectors. This expansion comes with streamlined documentation requirements and 15-day disbursal timelines through 20 empaneled lenders. The move aims to catalyze growth-stage funding amid declining venture capital inflows, with projected INR 8,000 crore additional credit flow in FY26. The guarantee cover remains at 80% for loans above INR 5 crore, with risk-sharing between government and participating institutions. Startup associations welcome this as improving working capital access but seek further relaxation in personal guarantee requirements for founders.