What is the difference between SISFS, MUDRA, and CGTMSE?
SISFS is a government seed grant and debt scheme for recognised startups, routed through incubators. MUDRA is a small collateral-free loan for micro businesses, given by banks. CGTMSE is not money at all, it is a guarantee that lets a bank lend you a larger amount without collateral. One gives equity-free grant money, the other two are credit.
| SISFS | MUDRA | CGTMSE | |
|---|---|---|---|
| Type | Grant + debt | Loan | Loan guarantee |
| Typical size | Up to ₹50 lakh | Up to ₹10 lakh (₹20 lakh Tarun Plus) | Backs loans up to a few crore |
| Equity taken | None on the grant part | None | None |
| Collateral | No | No | No, that is the point |
| You need | DPIIT recognition | A small enterprise | Udyam registration |
SISFS: equity-free grant money for early DPIIT startups
The Startup India Seed Fund Scheme runs all year through approved incubators. The prototype and proof-of-concept portion is a grant and takes no equity. The commercialisation portion comes as convertible debentures or debt, so read which part you are getting. You need DPIIT recognition and to be under two years old. If that is you, this is usually the first one to chase. Full detail in our SISFS guide.
MUDRA: small collateral-free loans up to ₹10 lakh
MUDRA, under the Pradhan Mantri Mudra Yojana, is for micro and small non-farm businesses. Loans come in three sizes: Shishu up to ₹50,000, Kishor up to ₹5 lakh, and Tarun up to ₹10 lakh, with a newer Tarun Plus band up to ₹20 lakh. No collateral, but it is a loan you repay with interest. Good for working capital once you have revenue, not for building a first prototype. See the MSME schemes guide.
CGTMSE: a guarantee that unlocks a bigger loan
CGTMSE does not hand you money. It guarantees a chunk of a bank loan to a micro or small enterprise, so the bank lends without asking for collateral. You register on Udyam, then apply for the loan at a bank that uses the scheme. Use it when you need more than MUDRA allows and can service the repayments.
Which should you apply for first?
Idea or prototype stage, DPIIT-recognised: SISFS, because the grant part is free money. Early revenue, need working capital under ₹10 lakh: MUDRA. Growing, need a larger collateral-free loan: a CGTMSE-backed loan. Most founders end up using more than one over time, just not at the same moment.
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