COVID-19 STARTUP ASSISTANCE SCHEME (CSAS)
Context
COVID-19 pandemic has impacted the entire economy and the startup ecosystem is
no exception. SIDBI recognizes the operational and financial challenges being faced
by the start-ups and endeavors to provide financial assistance and stability via its
scheme viz. Covid-19 Startup Assistance Scheme (‘CSAS’). This scheme will provide
assistance to innovative startups that have demonstrated ability to adapt to
economic impact from Covid-19 and ensured its employees safety and financial
stability.
Scheme and Process
CSAS aims to provide assistance to startups that will directly benefit from the scheme.
The objective of the Scheme is to provide quick working capital in the next 45 to 90
days to the Start-ups. Therefore, for a faster processing a Recommendation
Committee comprising of 5 members (3 from SIDBI and its nominees and 2 from
Venture Capital Industry) will be created. The process followed for screening by the
application shall be as follows:
1. The Scheme document shall be available on SIDBI portal.
2. An application cum Credit Appraisal Memo (CAM) along with Self Assessment
Tool (SAT) shall be made available on the SIDBI portal.
3. Start-ups are required to fill the CAM, SAT, and submit the documents to a
designated email id (
[email protected]), within 15 days of launch of the Scheme.
4. The Recommendation Committee will run a process, which will include a credit
evaluation, Video Conference with the startup and VC Investor.
5. Thereafter proposed Internal Credit committee of SIDBI (ICC) will hold a weekly
meeting to approve loans to Startups. During the ICC meetings, the Startups
along with the VC Investor may be required to be available for a Video
Conference meeting.
6. Approval or rejection will be communicated on the same day by email.
7. The Loan Agreements and related documentation will be completely digital.
The Scheme will be launched all throughout the country, for Government defined
Start-ups, based on the eligibility criteria detailed in the Scheme.
The broad parameters of the Scheme are given below:
Name of the Scheme Covid-19 Startup Assistance Scheme (CSAS)
Type of Facility WCTL
Purpose To provide interim support to startups whose
cash flow and liquidity has been adversely
impacted by the Covid-19 pandemic. The
assistance can be used for various working
capital requirements like salaries / wages, rent,
administrative expenses, payment to vendors
etc.
The loan may also be considered against the
GST refund.
Tenor of the Loan Upto 36 months including maximum moratorium
period of 12 months. Loan to be repaid in max 24
instalments.
Loan Amount Not more than INR 2 Crores per Start-up
Eligible Beneficiaries Eligibility criteria for startups:
I. Government defined Start-ups which has
received funding through Alternate
Investment Fund registered with SEBI or by
any VC / PE / Angel Fund investing in startups
in India.
II. Startups with a minimum employee base of
50 employees. This may also include the foot
soldiers.
III. Startups having FY 2019 and FY 2020
minimum turnover between INR 20 crore to
INR 60 crore
IV. Startups should be EBITDA positive in
December 2019. If not, they should be in a
position to project positive EBITDA for the
quarter ending June 2020.
V. Startup should have been incorporated for
less than 10 years
VI. Startups should have a positive Net Worth
VII. Startups should have demonstrated
innovative measures for ensuring business
continuity during the Covid – 19 period.
VIII. Startups should have taken adequate
measures and ensured employee safety and
their financial stability
IX. Promoter / Founder of startup should have
invested his own capital in the business
The below category is not eligible
I. Written off Startups by AIFs
II. Startups who are in Stress usually other than
the present Covid-19 (as recommended by
the Fund Manager)
III. Startups who do not have strong Intellectual
Property or Innovative
IV. Startups having working capital facilities with
any Bank.
Insurance for Employees Each loan to the Start-ups will carry the following
Insurance.
1. Key Man insurance assigned to SIDBI.
2. All employee term Insurance upto 10 lakhs.
Cost of premium shall be borne in following pattern:
50% by SIDBI
25% by the Investor Fund
25% by the Startup
The share of startup may be apportioned in the loan
disbursement amount.
Margin/Promoters NIL
Contribution
Rating Not Applicable
Security Mandatory Security:
• First Pari-Passu charge on current assets of the
Company
• Keyman Insurance to the extent of facility
amount disbursed to secure the facility
Additional Security, if available:
• Hypothecation of movables of the company.
• Pledge of Intellectual Property
• Pledge of Promoter shares
• Personal Guarantee of Promoters
• GST Refund (if any)
Interest rate 12% p.a. reducing balance
Disbursement Mechanism Need based single / multiple tranche
Share Warrant Option At any time, during the currency of the WCTL,
SIDBI will have the right to subscribe upto 2% of
the share capital of the Company “at par” and as
per the terms of Share Warrant Agreement.
The Company will not change the share capital
structure of the company without prior approval
of SIDBI. Approval for any change in share capital
structure may be granted on terms and
conditions considered appropriate for
safeguarding SIDBI’s interest under Warrant
Agreement.
Processing Charges 2% of the sanction amount
Prepayment Charges As applicable
Penal Interest Default interest rates would apply on every overdue
facility and would be applicable on the entire
defaulted amount (principal and/or interest). The
penal interest rate on defaulted accounts would be
2% per month on overdue facility.
Conversion in case of Default In case of default in repayment / payment of
principal or interest installment(s) continuing for
more than 180 days, then SIDBI will have the right
to convert that defaulted installment(s) along with
its accrued interests, penal interests and all other
costs and charges (either in full or in part) into
equity capital of the Company “at par”.
Legal Documentation As per the facility and security provided
Recommendation Recommendation Committee to be set up by SIDBI.
Committee
Sanctioning Authority Internal Credit Committee to be set up by SIDBI.
Source of Fund SIDBI’s Balance Sheet as SIDBI will directly provide
the facility to start-up.
