‘A great step’: Snapdeal' co-founder Kunal Bahl on Budget’s move to double startup MSME credit guarantee to ₹20 cr

Snapdeal co-founder Kunal Bahl welcomed the Union Budget 2025-26’s focus on boosting credit access for startups and MSMEs, highlighting the doubling of the credit guarantee limit as a transformative move. “Increase in startup MSME credit guarantee to ₹20 crore from the current ₹10 crore is a great step in allowing ease of working capital financing for startup MSMEs. This has been a big bottleneck for startups to grow without diluting their equity,” Bahl said, underscoring a challenge that has long stifled entrepreneurial growth.

Presenting the Budget, Finance Minister Nirmala Sitharaman on Saturday announced that the credit guarantee cover for startups would be enhanced from ₹10 crore to ₹20 crore. This move aims to ease access to working capital, reduce the dependency on equity funding, and provide startups with the financial flexibility needed to scale operations. Additionally, the guarantee fee will be moderated to 1% for loans in 27 focus sectors critical to the Aatmanirbhar Bharat initiative.

Sitharaman also revealed changes to MSME classifications, with investment and turnover limits being raised to 2.5 times and 2 times their current thresholds, respectively. "This will give them the confidence to grow and generate employment for our youth," she stated, emphasizing the government’s focus on job creation through MSME expansion.

For micro and small enterprises, the credit guarantee cover will be increased from ₹5 crore to ₹10 crore, potentially unlocking an additional ₹1.5 lakh crore in credit over the next five years. Exporter MSMEs will also benefit, with term loan guarantees extended up to ₹20 crore. To further support micro-enterprises, customized credit cards with a ₹5 lakh limit will be introduced for those registered on the Udyam portal.

The Budget’s measures are seen as a strategic push to foster innovation, strengthen MSMEs, and support the entrepreneurial spirit that fuels India’s economy.