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Govt Doubles Startup Loan Guarantees to ₹20 Cr, But 90% Founders Will Still Miss Out. Here's Why While most founders have spent an exciting time pitching VCs and regarding equity as capital, a quiet little yet great update in Budget 2025 has changed the rules for some of those attending. Supercharged Credit Guarantee Scheme for Startups (CGSS): → Loan guarantee limit increased to ₹20 crore. → Guarantee fee down to just 1% for 27 high-impact sectors. → Still without collaterals required. → 65-80% of the loan would be covered by the government. Sounds like a dream come true for founders, isn't it? A way to touch meaningful capital without giving large pieces of equity away. Here is the actual impact: ⤷ Raise ₹7 crore in equity + ₹3 crore CGSS loan ⤷ Dilution: only 14% instead of 20% for a ₹10 crore round ⤷ 6% equity saved = ₹30 crore more at ₹500-crore exit Yet, most startups will never use this. Why? 1. Mindset Trap • VC = validation (not always) • Debt = "traditional business" (wrong) • Fear of repayment (valid, but manageable) 2. Nobody Talks About It • Scheme specifics buried in government portals • No founder playbooks or how-to guides • Most founders don't know it exists 3. Wrong Game with Banks • Pitching like it's Shark Tank • Missing projections, cash flow plans and risk coverages • Targeting the wrong branches or bankers 4. Documentation Fumbles • No unit economics • Unclear repayment roadmap • Financials look like wishlists, not plans 5. Too Soon to Apply for • Pre-revenue stage • Weak founding team on paper • "Raise now, figure out later" mindset doesn't work here Who should apply then? • 6-12 months of revenue • DPIIT-recognized startup • Strong team with domain credibility • Clear business model with ROI-focused use of funds • Past loan history (even small) builds confidence Sure, however, that does not come without a few cons: → You still have to repay (debt carries its right responsibility). → Takes effort to prepare documents banks actually understand. → Not all sectors may be eligible. But if you do it right, you keep more of your company, grow with capital and control, and avoid painful over-dilution. <10% of India's startup capital comes from debt. In the US, it is between 30-40%. That gap is your opportunity. The early mover will benefit as the floodgates open. #StartupFunding #CGSS #IndiaStartups #DPIIT #FounderFinance #DebtVsEquity #StartupIndia #VCAlternatives #Budget2025