Accessing finance is one of the most critical steps for growing a business. In Nepal, both traditional banks and emerging microfinance institutions require a structured approach from entrepreneurs.
“Loans are not just approved based on need—they’re approved based on preparation and confidence.”
1. Lending Policy Updates You Should Know (As of 2025)
- Priority Sector Lending: Banks and financial institutions (BFIs) must increase loans to agriculture, MSMEs, and small manufacturing sectors by 2028 as per Nepal Rastra Bank (NRB) directives.
- Collateral-free Lending: Small loans to youth, women, returnee migrants, and rural entrepreneurs may be issued without traditional collateral if strong cash flow or order documents are available.
- Working Capital Loans: New guidelines promote working capital loans based on business cycle and turnover rather than fixed asset ownership alone.
2. Understanding Collateral: What Can Be Offered
- Fixed Assets: Land, buildings, and vehicles remain common forms of collateral. Valuation is generally 60–80% of market value.
- Movable Assets: Machinery, livestock, and equipment may be accepted by development banks and co-operatives.
- Deposits & Securities: Fixed deposit slips or listed shares are valid for many commercial loan applications.
- Cash Flow-Based Collateral: Some institutions accept verified purchase orders, sales contracts, or digital sales history for loan appraisal, especially under MSME-targeted schemes.
3. Documentation Checklist for Loan Applications
- Business Registration Certificate (from Ward Office or DoCSI)
- PAN Certificate and VAT registration (if applicable)
- Bank Statements for at least the past 6 months
- Financial Summary including income, expenses, and projected cash flows
- Collateral Documents: Land ownership deed (lalpurja), valuation report, or deposit certificates
- Tax Clearance Certificates or declarations for the last fiscal year
- Citizenship copy of the borrower and guarantors (if applicable)
4. Crafting a Strong Loan Pitch
In addition to documentation, how you communicate your business vision and repayment capability matters. Use the following structure to make your case:
- Purpose of the Loan: Clearly explain how the loan will be used—e.g., for working capital, inventory purchase, equipment, or expansion.
- Repayment Plan: Provide realistic revenue estimates and explain how repayments will be made monthly or seasonally.
- Business Strength: Highlight unique selling points, market demand, and your management capacity.
- Risk Mitigation: Briefly mention how you handle market fluctuations, supply chain delays, or customer risks.
5. Common Reasons for Rejection (and How to Avoid Them)
- Incomplete Documentation: Ensure all certificates, IDs, and proofs are properly updated and submitted.
- Unclear Financials: Keep basic income/expense records even if you’re not formally audited.
- Overstated Projections: Avoid exaggerating profits or demand—banks prefer realism.
- Poor Credit History: Settle old debts if possible and clarify any defaults or delays up front.
“A confident pitch with clean documentation builds lender trust—more than any collateral alone.”
6. Final Tips for Loan-Ready Entrepreneurs
- Visit multiple institutions—compare terms, interest rates, and processing fees.
- Ask if your business qualifies under targeted lending schemes (women-led, youth entrepreneurship, agriculture, etc.).
- Maintain a simple but consistent bookkeeping habit—it proves your reliability over time.
- Prepare a 1-page business summary to accompany your application—it shows professionalism.
Final Words
Loans can accelerate growth, but they come with responsibilities. Being loan-ready means knowing what financial institutions need, showing how your business generates income, and demonstrating your ability to repay. With the right preparation, getting financed in Nepal is more accessible than ever before—especially for serious, well-documented entrepreneurs.
“Finance follows clarity. Show lenders that your business—and your mind—are investment-ready.”
