Government initiates startup loans program to boost business growth

KATHMANDU: The government is extending support to startup businesses, which refer to newly established companies or ventures, typically in their early stages of development. These businesses are often characterized by innovative ideas, disruptive technologies, or unique approaches to solving market problems.

Additionally, businesses operating under the latest systems to provide services and products can also be categorized as startups.

Startup businesses usually encounter challenges in their initial years.

However, as they gain popularity among customers, these businesses have high chances of success. Despite their potential, startups often face various challenges in collecting investment and commencing their journey.

Recently, on 19th Magh 2080, the Industrial Enterprise Development Institute (IEDI) announced its initiative to provide loans for startup businesses. Those interested in applying for these loans should operate within the 16 startup business sectors classified by the institute and can submit their applications within 21 days.

The sectors eligible for startup business loans include:

Agriculture and Livestock

Forest, Tourism promotion, entertainment, and hospitality

Science, Technology, Information, and Communication

Human health service

Education and pedagogical activities

Easy and secure transport service

Automobile

Traditional technology

Production and service enhancement

Mining and Mineral Exploration and Development

Domestic or daily livelihood

Production and processing of food products

Waste management and environment protection

Disaster management

Renewable energies

Climate Change

In the context of Nepal, established businesses in the global arena could also be considered startups. Services and products offered by these businesses could bring new experiences to our country. Companies like Amazon, Alibaba, Apple, Microsoft, Meta, Facebook, Google, Tesla, and cryptocurrency were once startups and are now vital to the global economy.

Similarly, in Nepal, businesses like E-sewa, Pathao, Foodmandu, Daraz, Namaste Pay, and Nepali Patro were once startups. Nepal Warehouse Company, Muktinath Agricultural Company, Matka Chiya, Banana House, and Mato Brand also started as startups. Advancements in technology and innovation have provided fertile ground for these startups to grow into global-scale enterprises.

Companies like E-sewa and Daraz, which began with minimum investment, now conduct transactions worth billions of rupees, providing employment opportunities and contributing significantly to government revenue. This serves as evidence that startups have the potential to thrive in our country in the future.

s per the National Startup Enterprise Policy (draft), businesses operating with new and innovative thinking, capable of growth, are eligible to be termed as startup businesses.

These businesses should meet certain criteria, including:

Annual income less than Rs 5 million

Less than 10 employees

Legal registration

Fixed capital (including home and land price) not exceeding Rs 20 million

Requirements for obtaining a loan under this policy include:

Paid-up capital between Rs 200,000 and Rs 1 million

Business registration not exceeding seven years from the date of application

Operating within the 16 specified categories

Annual transactions not exceeding Rs 20 million

Fixed capital less than Rs 20 million (excluding house and land)

PAN registration

Compliance with prevailing laws regarding registration and renewal

Tax clearance and audit

Employment of full-time workers

Not being blacklisted

To file an application:

Startup businesses seeking a loan ranging from minimum Rs 500,000 to Rs 2,500,000 can submit their applications by Falgun 10 at the Industrial Enterprise Development Institute (IEDI) Office in Tripureshwor, Kathmandu.

The sample application form can be obtained from the Startup Enterprises Credit Fund Working Procedures 2024, available online.

Merits of the loan include:

Facilitates business growth.

Offers loans at a low-interest rate.

No property required for mortgage agreement; the related project serves as collateral to secure the loan.

Installment payments commence only after two years of securing the loan.