The Ministry of Industry, Supply and Commerce (MoISC) has approved the ‘Startup Enterprise Loan Operation Procedure, 2081’ for this year’s startup enterprise loan program.
According to the recently approved procedure, loans can be obtained at 3% interest rate. The loan amount will range from NRs 500,000 to a maximum of NRs 2.5 million. The maximum loan tenure will be five years, while repayment will begin after one year of disbursal of the first instalment.
The government has allocated a fund of Rs 1 billion as ‘Startup Fund’ this fiscal year which will be loaned to various startups and MSMEs. Such a fund was NRs 250 million last fiscal year 2023/24 under the ‘Startup Enterprise Loan’ program out of which over NRs 170 million has already been disbursed to 165 projects out of the 183 selected projects. A total of 1,658 projects had applied.
| What is a startup enterprise?
A “startup enterprise” refers to a business that emphasises innovation and creativity across its development, production, operations, and distribution of goods, services, and processes. It operates with growth potential and seeks to advance through new research and inventive approaches. Additionally, it often leverages information technology to enhance its offerings and processes. |
Who are eligible:
- Firms registered for no more than ten years
- The annual turnover must not have exceeded NRs 150 million rupees in any fiscal year after the establishment
- Private firms, partnership firms, companies or cooperative organisations registered within the industrial registration bodies
- Applicant firms should be completely a new business enterprise. It shouldn’t have been merged or split off in the past
- Firms should be based on new ideas that are translated into business and must demonstrate growth potential
Who aren’t eligible:
- Firms which are not registered as industry
- Firms engaged in the line of import and distribution of goods and services
- Firms that are blacklisted
- Firms registered as holding and investment companies under Industrial Enterprise Act, 2076
- Firms registered after the published date of call for application
An entrepreneur can submit only one proposal. A self-declaration confirming that no concessional loans have been received from other agencies is required. Entrepreneurs with outstanding concessional loans from other agencies will also be ineligible for the startup loan until they are fully repaid.
What will be the basis of evaluation of the proposal?
Proposals will be assessed by a committee of experts, who will consider factors such as:
(a) present status of the enterprise
(b) integration with technology,
(c) turnover in the previous financial year,
(d) market potential for sale of goods or services produced by the project;
(e) domestic use of direct raw materials
(f) availability of infrastructure required for the project,
(g) measures adopted for risk management,
(h) presentation of business proposal and employment creation,
(i) credit appraisal
The program does not require any fixed assets as collateral; instead, the approved business or project itself will serve as collateral. However, entrepreneurs are responsible for obtaining insurance coverage for their business or project on their own. Additionally, the lending bank may impose administrative or service charges of up to 0.1% of the loan amount, which is also well below the current bank rates.
One or more banks will be appointed to issue these loans. When disbursing a loan, the banks will provide the loan amount in one instalment for loans up to five lakhs, two instalments for loans up to fifteen lakhs and three instalments for loans above that.
This startup loan program will be implemented only by the Industrial Enterprise Development Institute (IEDI), which now plans to open a call for applications at the earliest.
For more information, you can find the entire working procedure here.
