Amidst COVID-19, SIDBI Announces Relief Measures for Startups

The COVID-19 pandemic has forced the country to go into complete lockdown. As a result, the revenues of the companies, including the Startups have taken a big hit.

Amid Corona crisis, SIDBI is providing financial assistance in the form of quick working capital to startups. A COVID-19 Startup Assistance Scheme (CSAS) has been announced by the Small Industries Development Bank of India (SIDBI). The intent is to help startups during this crisis

CSAS from SIDBI will assist the innovative startups that have demonstrated the ability to adapt to economic impact from COVID-19. The financial institution is also assisting the startups in ensuring its employees' safety and financial stability. According to SIDBI, this is purely an interim arrangement. The purpose of the scheme is to assist startups who are facing a cash crunch due to COVID-19 crisis.

The RBI regulated institution has lined up Rupees 100 crores for working capital loan facility to the startups. The startups can avail loans of up to 2 crores to meet the expenses like rent, vendor payments, and salaries amid the Corona crisis.

The tenor of the loan is up to 36 months, including a maximum moratorium period of 12 months. The repayment of the loan is to be done in max 24 instalments.

The interest rate set by SIDBI is 10.50% p.a. reducing balance and there is a processing charge of 1% of the sanctioned amount

Eligible Beneficiaries for COVID-19 Startup Assistance Scheme (CSAS)

The following are the eligibility criteria:

• Government defined Startups which has received funding through at least one of the Alternate Investment Funds registered with SEBI.

• Startups with a minimum employee base of 50 employees including foot soldiers (Relaxable on case to case basis)

• Startups having minimum turnover between Rs 10 - 60 crore (FY 2019 and FY 2020)

• Startups having positive unit economics incorporated for less than ten years.

• Startups with positive net worth

• Startups which have demonstrated innovative measures for ensuring business continuity during the COVID – 19 period.

• Startups which have taken adequate measures and ensured employee safety and their financial stability

• Promoter / Founder of a startup should have invested his own capital in the business

The below category is not eligible for CSAS

• Any written off Startup by AIFs

• Any Startup which already has a working capital facility with any Bank or a startup which is already in a stress (other than the present COVID-19)

You may access the CSAS scheme documents from the official SIDBI portal. More details are available here.
According to a report by TiE Delhi-NCR and Zinnov released late last year, there are as many as 7,039 startups in Delhi-NCR, followed by 5,234 firms in Bengaluru, 3,829 in Mumbai and 1,940 in Hyderabad.

VCs want Sidbi to ease sops criteria for COVID-19 Startup Assistance Scheme.

Private Equity and Venture Capital Association (IVCA) is not very happy with the eligibility criteria. Therefore IVCA has requested SIDBI to ease the qualifying criteria for its CSAS scheme.

In addition to that, IVCA has proposed that instead of 2 Crores, Sidbi should raise the loan amount to Rs 5 crore and reduce the interest rate on such loans.

IVCA also want SIDBI to remove the criteria that only startups that are unit economics-positive are eligible to apply for CSAS. Further, the loan should have a longer payback duration.

Considering the severe impact that Corona has inflicted on the companies, IVCA has proposed that SIDBI should increase the moratorium up to 18 months, with payment within 48 months of disbursal.
The representative body for risk capital in India is expecting that SIDBI will ease sops criteria for CSAS Scheme.


The representative body intends to accommodate as many startups as possible. Therefore they want a reduced turnover limit, Ebitda criteria dropped as also the employee count.