The government is set to call for proposals from interested startups businesses to avail collateral free loans with finalizing the working guideline on the matter.
The government is providing startups with collateral free subsidized loans of up to Rs 2.5 million. According to the Ministry of Industry, Commerce and Supplies (MoICS), it has brought into force the working guideline of startups enterprise credit fund and will call for the proposal within a week.
The MoICS has formed an implementation committee led by Ram Chandra Tiwari, director general of the Department of Industry, to oversee the utilization of the seed money that the startups will receive. Tiwari said they will grant a period of 21 days for the startups to apply for the loans.
According to him, they will release approved loans via three state-owned banks including Nepal Bank Limited, Rastriya Banijya Bank and Agriculture Development Bank. The interest rate of such loans has been fixed at three percent per annum.
Any startup that was established within the past seven years, has a paid-up capital of less than Rs 5 million and has annual revenue not exceeding Rs 5 million will be eligible to get a subsidized loan from the government. Similarly, the startup should have fixed capital investment not exceeding Rs 20 million, not having more than 10 full time employees and should be innovative to address the production and distribution system to relieve the consumers.
Through the budget for the fiscal year 2021/22, the government for the first time announced to provide project loans to startups. However, the government’s plan has been put on hold for a long time, mainly due to the lack of a related law.
