SISFS vs MUDRA vs CGTMSE: which one fits your stage

What is the difference between SISFS, MUDRA, and CGTMSE?

SISFS was 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 gave equity-free grant money, the other two are credit.

SISFS: equity-free grant money, now closed to new applications

The Startup India Seed Fund Scheme ran through approved incubators. Its portal stopped taking new startup applications on 31 May 2026, incubators had until 30 June 2026 to finish selecting, and no new call has been announced. The prototype and proof-of-concept portion was a grant and took no equity. The commercialisation portion came as convertible debentures or debt. It needed DPIIT recognition and a company under two years old. For a prototype today, look at NIDHI PRAYAS if you build a physical product, the MSME Innovative incubation component, or your state's grant. Full detail, including the closure, 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: not SISFS, which closed to new applications on 31 May 2026. Look at NIDHI PRAYAS if you are building a physical product (up to ₹20 lakh at a PRAYAS Centre, no DPIIT needed), the MSME Innovative incubation component (up to ₹15 lakh per idea, through a host institute), or your state's grant. The open-now page, regenerated weekly from the catalog, lists what closes in the next 60 days. 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.

Common questions

Is SISFS a grant or a loan?

SISFS gave both. The prototype and proof-of-concept portion (up to about 20 lakh) was a grant that took no equity. The commercialisation portion (up to about 50 lakh) was convertible debentures or debt, not an outright grant. The scheme stopped taking new applications on 31 May 2026.

Do MUDRA and CGTMSE need collateral?

No. MUDRA loans up to 10 lakh (20 lakh under Tarun Plus) are collateral-free, and CGTMSE exists specifically to guarantee bank loans for micro and small enterprises so the bank does not demand collateral.

Which should an early-stage Indian startup apply for first?

Not SISFS, which closed to new applications on 31 May 2026. For a prototype, look at NIDHI PRAYAS if you are building a physical product, the MSME Innovative incubation component through a host institute, or your state's grant. Use MUDRA or a CGTMSE-backed loan when you need working capital and can service repayments.