COVID-19 Startup Assistance Scheme (CSAS)

The Government of India has enforced strict lockdowns in an attempt to halt the spread of the COVID-19. The Small Industries Development Bank of India (SIDBI) is taking proactive steps to facilitate businesses and startups impacted by the COVID-19 lockdown. SIDBI has launched the COVID-19 Startup Assistance Scheme (CSAS) to provide working capital loans to startups that have demonstrated the ability to adapt to economic impact from COVID-19.

Objective of the CSAS

The objective of the COVID-19 Startup Assistance Scheme (CSAS) is to provide quick working capital to the Startups during this lockdown period.

Purpose of the CSAS

The purpose of introducing the COVID-19 Startup Assistance Scheme (CSAS) is to provide interim support to growth-stage startups whose cash flow and liquidity have been adversely impacted by the Corona Virus pandemic. The financial assistance provided under the CSAS can be used for various working capital requirements of the startup, such as :

Salaries/wages
Rent
Administrative expenses
Payment to vendors

The loan provided under the COVID-19 Startup Assistance Scheme (CSAS) will be considered against the GST refund.

Eligible Beneficiaries of CSAS

The eligibility criteria to obtain financial assistance under the COVID-19 Startup Assistance Scheme are as follows:

Government defined startups that have obtained funding through at least one of the Alternate Investment Fund (AIF) registered with the Securities and Exchange Board of India (SEBI) are eligible for CSAS.
If a startup with a minimum employee base is 50 employees, then such a startup can apply for financial assistance under the COVID-19 Startup Assistance Scheme (CSAS). This may also include the startup’s foot soldiers
Startups should have demonstrated innovative measures for ensuring business continuity during the COVID-19 period to get financial assistance
Startups should have a minimum turnover of Rs.10 crore to Rs.60 crore during the financial years 2019 and 2020
To become eligible for this scheme, startups should have positive unit economics
Startups should have been incorporated for less than ten years can apply for this scheme
Startups should have a positive net worth to avail the financial assistance under the scheme
Startups need to take adequate measures and ensure employee safety and financial stability
The promoter/founder of a startup should have invested their capital in the business to get the CSAS loan.

Non-Applicability

Startups under the below categories are not eligible for the financial assistance under the COVID-19 Startup Assistance Scheme (CSAS):

Startups wrote off by Alternative Investment Funds
Startups that are in stress other than the present Covid-19 pandemic (as recommended by their Fund Manager) are ineligible for the scheme
Startups having working capital facilities with any bank also not eligible for the loan under this scheme

CSAS Loan Amount

SIDBI is providing Rs.2 Crores for eligible startups under the COVID-19 Startup Assistance Scheme (CSAS).

The Tenor of the Loan

The tenor of the CSAS loan is three years, including a maximum moratorium period of 1 year, and the Startups need to repay the loan amount maximum of 24 instalments.

Insurance for Employees

COVID-19 Startup Assistance Scheme (CSAS) loan to the Startups will provide the following insurance to employees.

Key Main insurance assigned to Small Industries Development Bank of India
All employee term Insurance Upto Rs.10 lakhs

Cost of premium

Cost of premium shall be carried in the following pattern:

SIDBI-50%
Investor Fund-25%
Startup-25%

Note: The share of a startup may be distributed in the loan disbursement amount.

CSAS Security Details

Mandatory Security

First Pari-Passu charge on current assets of the Firm
Keyman Insurance

Additional Security, if available:

Hypothecation of movables of the firm
Pledge of Intellectual Property
Pledge of Promoter shares

Interest Rate

The interest rate for the loan under the COVID-19 Startup Assistance Scheme (CSAS) will be 10.50% per annum, reducing balance.

Loan Disbursement Detail

The SIDBI will provide the loan to eligible startups according to the need of the firm in single or multiple tranches.

Share Warrant Option for CSAS Scheme

At any time, during the currency of the Working Capital Term Loan, SIDBI will have the right to subscribe to Upto 10% of the Loan Amount with a 50% discount to the previous tranche.

Loan Processing Charges

The startups need to pay 1% of the sanctioned amount as a processing charge to the SIDBI.

Conversion in case of Default

In case of default in repayment of CSAS principal or interest instalment continuing for more than six months, then Small Industries Development Bank of India (SIDBI) will convert that defaulted instalment along with its accrued interests, penal interests, and all other charges into equity capital of the Company.

Other Condition

The assistance loan provided under the COVID-19 Startup Assistance Scheme (CSAS) cannot be used to pay any debt, including Venture Debt, and the amount will not be subordinated debt. The promoter or investor of the startup cannot sell shares without SIDBI’s consent

CSAS Process

To provide quick working capital to the startups, the SIDBI has created a committee comprising of 5 members for faster processing of a loan.

Documents for CSAS

The following documents are mandatory for applying for COVID-19 Startup Assistance Scheme (CSAS)

Promoters and Guarantors

Bio-data and Net worth Statement
Photographs, signatures attested by bankers
Copies of passport/ PAN card/Aadhaar card
Three years of Income Tax Return and wealth tax returns
Net Worth statement

Applicant Company

DPIIT Registration details/Copy of MSME registration/EM under MSMED Act
Certified copies of KYC documents like MAOA, Partnership deed, PAN allotment letter, Copy of Telephone Bill
The last two years audited financial statements of the enterprise and associate concerns with auditor’s report, notes to accounts, and tax audit report.
Provisional b/sheet and Profit and Loss Statement (P&L) of the enterprise as on the latest date
Latest 2-year ITR and Sales tax return, copy of the latest receipt for advance tax paid. Copy of IT assessment orders for the past two years
Copies of registration with statutory authorities viz GST, EPF, etc
Copies of other statutory approvals obtained
Copies of sanction letters for credit facilities from Banks
Bank statement of all bank accounts for the past one year
Copy of the latest CMA data submitted to WC banker, if any.
Pollution Control Board approval document for existing and proposed units
Copy of sale, lease deed, rental agreement

CSAS Application Procedure

Startups are required to fill the application cum Credit Appraisal Memo (CAM) along with Self Assessment Tool (SAT), and submit the documents to designated email id - csas@sidbi.in The application and Credit Appraisal Memo (CAM) and the Self Assessment Tool (SAT) is as follows: [pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2020/05/ilovepdf_merged.pdf" title="CSAS"]

The Recommendation Committee will scrutinize the documents and proceed with a credit evaluation, Video Conference with the startup, and Venture Capitalist Investor.
A proposed Internal Credit Committee (ICC) of SIDBI will hold a meeting to approve CSAS loans to Startups. During these weekly ICC meetings, the applicant Startups and the Venture Capitalist Investor need to be available for a Video Conference meeting.
Approval or rejection of the application will be communicated on the same day by email. The Loan Agreements and related documentation will be communicated through the mail.