February 8: The government is gearing up to provide loans to start-up enterprises at subsidized interest rates from upcoming month of Baishakh (mid-April to mid-May).

The government had recently called eligible companies to submit applications for the startup enterprise loans.

Three government agencies signed a memorandum of understanding on Wednesday to facilitate start-up loans. Following the agreement, the Industrial Enterprise Development Institute is preparing to begin disbursing loans for start-ups from upcoming April-May.

The Industrial Enterprise Development Institute, Rastriya Banijya Bank and the Deposit and Credit Guarantee Fund signed the tripartite MoU for releasing the start-up enterprise loan by keeping the project as collateral.

Umesh Kumar Gupta, executive director of the institute, said the MoU has paved the way for disbursing the loans from April. He claimed that this program will be implemented in the current fiscal year if things go according to the plan. 

The government introduced the Startup Enterprise Loan Operation Procedure 2080 on January 25. After the implementation of the procedure, the institute issued a 21-day notice seeking proposals for the startup enterprises loans on February 2.

"The government has been taking initiative to address the issue of youth migration by creating jobs in Nepal," said Gupta, "Since the government has already allocated the required budget, it is now possible to get loans for start-up enterprises from the current fiscal year."

According to Gupta, the start-ups will get the loans after a certain steps. In the first step, the start-ups have to submit a proposal to the institute. Secondly, a list of applicants will be prepared according to the proposal. Applicants will then be called for a presentation of their startup venture. An evaluation committee will evaluate their presentation. The committee will have representatives from the institute and experts in the related field. The presentation of selected startups will be 15 minutes. The committee will give marks based on the presentation.

In the third stage, the institute will rate the projects and then recommend to the Rastriya Banijya Bank to provide loan. The state-owned bank will provide loans to the startup enterprises if they meet the required score for credit rating.

The government has adopted a policy of providing a maximum loan of Rs 2.5 million to start-up enterprises at a subsidized interest rate.

According to the new procedure, the bank will provide funds in one installment for loans up to Rs 0.5 million, 2 installments for loans up to Rs 1.5 million, and up to 3 installments for loans up to Rs 2.5 million. According to this procedure, a startup will get a concessional loan up to a maximum of Rs 2.5 million.

The new procedure approved by the government has designated 16 sectors and enterprises eligible for the start-up enterprise loans provided that the enterprise should not have been registered more than seven years ago. The loan will be provided in the areas specified by the procedure and the loan period will be 5 years.

In the procedure, there is a provision that borrowers should start paying the principal and interest from the second year. The interest rate of such a loan will be 3 percent per annum.

The government has allocated Rs 250 million for this program in the current fiscal year as well.