Are you starting up your own business?
Here is something the Nepal government has introduced which will help you encourage innovative ideas and promote startups -‘Startup Enterprise Loan Fund Procedure 2079’. Startups can expect to obtain collateral-free loans of up to Rs 2.5 million at a three percent interest rate for a maximum period of seven years, a substantial amount to support their business ideas.
Reportedly, the government has allocated NRs 250 million for this purpose in the budget speech this fiscal year, which means at least 100 startups may get the funds if effectively implemented.
What are the criteria for eligibility for the fund procedure?
- Businesses must not exceed 7 years of establishment or operation, with paid-up capital not exceeding Rs 5 million and annual total income not exceeding Rs 5 million;
- The fixed capital, excluding the value of land and house, should not exceed Rs 20 million, and the number of full-time workers in the enterprise should not be more than 10;
- The business must be creative and solve a particular problem, with at least 5% of annual expenditure dedicated to product development, market investigation, and development;
- The possession of a patent, design, or software is a prerequisite to qualify for funding, emphasizing the importance of technology and intellectual property.
- The procedure has specified businesses related to 14 sectors for funding — agriculture and animal husbandry; forest resource-based including medical plants; tourism and entertainment; science, communication, and IT; healthcare; education; transport; infrastructure; automobile; indigenous technology; mining and its research and development; household and essential goods and services; food production and waste management.
A startup enterprise implementation committee will be formed to manage the startup enterprise program systematically, inviting project proposals from new entrepreneurs who meet the criteria for lending to enterprises, selecting and evaluating proposed projects, and requesting loans for startup enterprises.
How will the evaluation process work?
- Invite proposals from interested entrepreneurs and prepare details of the proposed projects for loans.
- The interested startup will have to forward their complete project plan to receive the seed capital from the government. The evaluation and selection of feasible startup projects will be done within 30 days from the date of application
- The department has released a notice stating that startup entrepreneurs must submit their proposals to the department within 21 days of publication of the information to be included in the schedule.
- The committee will evaluate the business projects and recommend them to the central bank for lending. NRB will authorize certain banks to disburse loans to startup entrepreneurs.
- Loans will be provided in two installments with entrepreneurs receiving 50% of the loan amount in the first installment. The Ministry of Industry provides loans and seed capital to startups at subsidized interest rates by providing project collateral.
- Designated banks have to sign an agreement with startup entrepreneurs within 3 days of the NRB recommendation, and the entrepreneur will receive the first installment of the loan within 3 working days of signing the agreement.
