The Ministry of Industry, Commerce and Supplies, Department of Industry has approved the Startup Loan Working Procedure, 2080 which paves the way for getting a loan for startups in Nepal. The decision allows startups to get loans up to Rs 25 lakh with benefits from the government. The minister Ramesh Rijal approved the Startup Action Plan.
A startup loan will be issued by the Nepal Rastra Bank (NRB) at a 3% interest rate. The current Fiscal Year budget speech 2080/81 announced that a total amount of Rs 25 crore was sanctioned for loans. The program will be implemented by the Industrial Enterprise Development Institute.
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One thing that needs to be noted here is that the project itself can be placed as a security to obtain a loan from the bank.
Loans in installments
It’s mentioned that loanees will have to pay the principal and interest amount and provide necessary details during inspection by the regulatory bodies of the bank. Likewise, the progress report of the project has to be submitted every quarter.
The bank will provide a startup loan of up to Rs 5 lakh in one installment, while up to Rs 15 lakh of loan will be provided in two installments. For Rs 25 lakh in loan, it will take three installments. The term of such a loan will be of five years while the payment of principal and interest will start from the second year of taking the loan.
What kind of startups get the loan?
The Startup Loan Working Procedure, 2080 has stated 16 different startups that are eligible for a startup loan in Nepal:
- Startups related to agriculture and livestock,
- Forest production/products,
- Tourism promotion, entertainment, and hospitality,
- Related to science, technology, information, and communication,
- Related to human health,
- Education, teaching and learning,
- For safe transportation,
- Automobile,
- improvement in service delivery based on traditional methods,
- mine, mineral research and development,
- Related to household and daily life,
- Food production and processing,
- Waste management, and environment conservation,
- Disaster management,
- Related to alternative and renewable sources of energy
- Minimizing climate change
Up to Rs 25 lakh loan for Nepali startups
Entrepreneurs with startups that have innovative skills, knowledge, ideas, and capacity can apply for the loan in 21 days. Applications are to be submitted to the Department of Industry. Companies whose paid capital doesn’t exceed Rs 50 lakh are eligible to apply for the state loan.
The Rs 25 lakh loan comes at just a 3 percent interest rate for 7 years which is a highly concessional facility for aspiring companies. Further, the loan can be applied for with or without collateral while the applicants can place their own business as collateral.
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How to apply for a startup loan in Nepal?
The applicant can apply for a startup loan in Nepal at the Department of Industry or at startup@doind.gov.np.
The application must have other supportive documents including the applicant’s company or registration certificate copy, a copy of PAN, tax filing, and a copy of the citizenship of the company’s official representative. All these documents must be sent in one file in PDF format.
One startup company can only apply for one loan.
Entrepreneurship and startups are a blazing discourse in Nepal. It’s closely identified with stopping the flow of Nepali youth to foreign countries. Youth getting concessional loans from the government will encourage them in their deeds and also motivate others to explore and realize their potential. Let’s hope that the process of applying for a startup loan won’t be a messy affair at all. For more on this, do let us know in the comments below.