Table of Contents
The Startup Enterprise Loan Program is a government-backed financing scheme designed to support innovative and technology-driven enterprises in Nepal. Administered by the Industrial Enterprise Development Institute (IEDI) under the Ministry of Industry, Commerce and Supplies, this program provides collateral-free loans of up to NPR 20 lakh at a concessional interest rate of just 3% per annum to eligible startups.
The program operates under the Startup Enterprise Loan Operation Procedure, 2082 and the National Startup Enterprise Policy, 2081, marking a significant shift toward project-based financing where innovation itself serves as bankable security. This comprehensive guide explains the legal framework, eligibility requirements, application procedure, evaluation process, and compliance obligations for entrepreneurs seeking startup funding in Nepal.
Legal Framework for Startup Loan in Nepal
The startup loan scheme is governed by:
- Startup Enterprise Loan Operation Procedure, 2082 (2025)
- National Startup Enterprise Policy, 2081 (2024)
- Industrial Enterprises Act, 2076 (2019)
Implementing Authorities
| Authority | Role |
|---|---|
| Ministry of Industry, Commerce and Supplies (MoICS) | Policy formulation, budget approval, overall supervision |
| Industrial Enterprise Development Institute (IEDI) | Application management, evaluation, monitoring, coordination |
| Commercial Banks | Loan disbursement and recovery (primarily Rastriya Banijya Bank) |
| Deposit and Credit Guarantee Fund (DCGF) | Loan guarantee (project-based security) |
Key Features of Startup Loan Program
| Particulars | Details |
|---|---|
| Loan Amount | NPR 5 lakh to NPR 20 lakh (minimum to maximum) |
| Interest Rate | 3% per annum (concessional) |
| Loan Tenure | Up to 5 years |
| Grace Period | Up to 1 year after first installment |
| Collateral | Not required (collateral-free) |
| Security | Project proposal guaranteed by DCGF |
| Bank Service Fee | Up to 0.15% |
| Application Window | 21 days from public notice |
| Early Repayment | Permitted without penalty |
Note: The government has allocated significant funding for this program. IEDI has proposed increasing the maximum loan amount to NPR 25 lakh in future rounds. Check the latest IEDI notice for current limits.
Eligibility Criteria for Startup Loan
To qualify for the startup loan, entrepreneurs must meet the following eligibility criteria as specified in Section 4 of the Startup Enterprise Loan Operation Procedure:
Eligible Enterprises
A startup may apply if it:
- Business Age: Registered and in operation for less than 10 years
- Legal Registration: Registered as a private firm, partnership firm, company, or cooperative institution under prevailing laws
- Annual Turnover: Has not recorded annual turnover exceeding NPR 5 crore (50 million) in any fiscal year since establishment
- Independent Entity: Is not an extension, branch, or continuation of an existing business enterprise
- Innovation-Based: Based on innovative and creative ideas with potential for growth and scalability
- No Prior Loan: Has not previously received any government concessional or startup loan
Ineligible Enterprises
The following types of enterprises cannot apply for startup loans:
- Enterprises already registered as industries and operating under prevailing laws
- Enterprises engaged in import and distribution of goods or services
- Enterprises blacklisted under prevailing laws
- Enterprises registered after the date of publication of the loan notice
- Enterprises registered as holding or investment companies under Industrial Enterprises Act, 2076
- Subsidiaries of existing large businesses
- Single shareholder companies (in some cases)
Eligible Startup Sectors
The policy prioritizes startups operating in the following sectors:
| Sector Category | Examples |
|---|---|
| Agriculture & Production | Farming, food processing, herbs, livestock, forestry, agri-tech |
| Information Technology | Software development, mobile apps, digital services, public service tech |
| Infrastructure & Transportation | Logistics, electric vehicles, construction technology, safe transportation |
| Tourism & Hospitality | Tourism promotion, entertainment, hospitality services |
| Health & Education | Healthcare services, health-tech, education technology, teaching-learning |
| Traditional & Local Resources | Rural technology, indigenous skills, traditional craft improvement |
| Manufacturing | Production process improvement, household products, food production |
| Environment | Waste management, renewable energy, environmental solutions |
| Mining & Minerals | Research and development in mining sector |
Documents Required for Startup Loan Application
Applicants must submit the following documents along with their project proposal:
| S.N. | Document | Purpose |
|---|---|---|
| 1 | Business Registration Certificate | Proof of legal registration (firm, partnership, company, cooperative) |
| 2 | Registration Renewal Certificate | Proof of active operation and compliance |
| 3 | PAN/VAT Registration | Tax registration proof |
| 4 | Tax Clearance Certificate | Proof of tax compliance for previous fiscal year |
| 5 | Audited Financial Statements | Financial records from preceding fiscal year |
| 6 | Citizenship Certificate | Identity of authorized representative/owner |
| 7 | Detailed Business Plan/Project Proposal | In prescribed format (Schedule-3) |
| 8 | Proof of Innovation/Technology Use | Evidence or self-declaration of innovative approach |
| 9 | Employee Salary Details | Salary information for last fiscal year |
| 10 | Self-Declaration | Confirming no prior government startup loan received |
Important: Incomplete or misleading documentation is a common ground for rejection. Ensure all documents are accurate, up-to-date, and properly organized. False information can result in loan cancellation at any stage, even after approval.
Project Proposal Requirements
Your project proposal must be prepared in the format specified by IEDI (Schedule-3) and should include:
- Project Purpose and Goals: Clear objectives of your startup
- Business Model: How your enterprise operates and generates revenue
- Target Market: Customer segments and market analysis
- Problem and Solution: The problem you're solving and your innovative approach
- Detailed Cost Breakdown: How the loan amount will be utilized
- Revenue Projections: Expected financial returns
- Employment Potential: Number of jobs your startup will create
- Growth and Scalability Plan: Future expansion potential
Application Procedure for Startup Loan
Online Application Process
- Visit IEDI Official Website: Go to the Industrial Enterprise Development Institute portal
- Register and Login: Create an account with valid credentials
- Complete Application Form: Fill out the Schedule-3 proposal format
- Upload Documents: Attach all required documents in specified format
- Submit Application: Submit within the 21-day deadline from notice publication
- Receive Confirmation: Note your application reference number
Offline Application Process
- Download proposal format from IEDI website
- Prepare hardcopy of all documents
- Submit at IEDI office, Gyaneshwar, Kathmandu
- Obtain acknowledgment receipt
Note: Only one proposal per entrepreneur or household is permitted. IEDI publishes a public notice in national newspapers when applications open. The application window is 21 days from the date of publication.
Evaluation and Approval Process
The startup loan evaluation follows a structured, multi-step process:
Step 1: Initial Screening
IEDI verifies that applications meet basic eligibility requirements including registration status, business age, turnover limits, and innovation criteria. Non-compliant applications are rejected at this stage.
Step 2: Shortlisting
IEDI publishes the list of all proposals received, categorized by business sector. Eligible applications are shortlisted for the presentation round.
Step 3: Business Plan Presentation
Shortlisted applicants are invited to present their business plans before an expert evaluation committee. This can be conducted physically or online. Applicants must explain:
- Their business idea and market opportunity
- Innovation and technology use
- Financial projections and sustainability
- How the loan will support growth
Step 4: Scoring and Evaluation
Each proposal is scored based on specific criteria:
| Evaluation Criteria | What Evaluators Assess |
|---|---|
| Innovation and Technology | Use of creative thinking, technology adoption, uniqueness |
| Growth Potential | Scalability, market expansion possibilities |
| Financial Feasibility | Revenue projections, cost management, sustainability |
| Market Demand | Customer need, market size, competitive advantage |
| Employment Creation | Number of jobs created or planned |
| Presentation Quality | Clarity, data accuracy, conviction |
| Raw Material Sustainability | Source and availability of inputs |
| Current Enterprise Status | Progress made, operational capacity |
Step 5: Bank Credit Appraisal
After committee evaluation, proposals are forwarded to the designated commercial bank for credit appraisal. Within 10 days, the bank conducts:
- On-site inspection of business premises
- Financial assessment
- Repayment capacity evaluation
Step 6: Final Selection
IEDI combines evaluation scores and bank appraisal to determine final scores. Key points:
- Minimum Score Required: 50% of total marks to qualify
- Highest scorers are prioritized for loan recommendation
- Committee may approve different amount than requested (with justification)
- Final list published on IEDI website
- Selected applicants notified by phone/message
Critical: Selected applicants must contact the designated bank within 30 days of recommendation. Failure to do so results in automatic cancellation of approval—no extensions, no exceptions.
Loan Disbursement and Repayment
Agreement Process
Before disbursement, selected entrepreneurs sign a formal agreement with the partner bank covering:
- Repayment schedule and interest rate
- Installment dates and amounts
- Consequences of default
- Monitoring and reporting requirements
Disbursement Structure
Loans are released in installments based on loan amount:
| Loan Amount | Number of Installments |
|---|---|
| Up to NPR 5 lakh | 1 installment |
| NPR 5-15 lakh | 2 installments |
| NPR 15-20 lakh | 3 installments |
- First installment released within 7 working days of agreement
- Subsequent installments subject to utilization verification (bills, invoices, site verification)
Repayment Terms
- Loan Tenure: Up to 5 years
- Grace Period: Up to 1 year from first disbursement
- Interest Rate: 3% per annum (fixed)
- Early Repayment: Permitted without penalty
Post-Approval Compliance and Monitoring
Loan recipients must maintain strict compliance with program requirements:
Mandatory Obligations
- Fund Utilization: Use funds strictly for approved purposes as stated in proposal
- Quarterly Reports: Submit progress reports to the bank
- Annual Reports: Submit comprehensive annual report to IEDI covering progress, challenges, and government support needs
- Inspection Cooperation: Allow and cooperate with site visits and monitoring
- Display Board: Display a board stating "Government of Nepal's Subsidized Loan Facility" at business premises
- Record Keeping: Maintain detailed records of fund utilization
Consequences of Non-Compliance
- Warnings: Official directions to correct within specified timeframe
- Loan Recall: Full loan amount may be recalled if improvements not made
- Blacklisting: Recommendation for blacklisting restricts future loan access from any financial institution
- Asset Freezing: Bank accounts may be frozen until settlement
- Legal Action: If documents found to be fake, case referred for prosecution
Benefits and Incentives
Financial Benefits
- Low Interest Rate: Only 3% per annum compared to commercial rates of 10-15%
- Collateral-Free: No land or property required as security
- Minimal Fees: Bank service fee capped at 0.15%
- Flexible Repayment: Grace period and early repayment options
Support Services
- Advisory Support: IEDI provides ongoing professional guidance
- Entrepreneurship Training: Optional training sessions before disbursement
- Mentorship: Connection with industry experts and mentors
- Awards: Recognition for exceptional performance
Tips for Successful Application
- Register Your Business Early: Complete company registration and ensure all compliance requirements are met
- Prepare Documentation: Gather audited accounts, tax records, and all required documents well in advance
- Develop Strong Business Plan: Create realistic, data-driven projections with clear innovation focus
- Highlight Innovation: Clearly demonstrate how your business uses technology or creative approaches
- Show Employment Impact: Emphasize job creation potential
- Practice Your Presentation: Prepare to explain your idea clearly and confidently
- Be Honest: Accurate information is crucial—false declarations lead to disqualification
- Meet Deadlines: Submit within the 21-day window and respond to bank within 30 days if selected
Common Reasons for Rejection
- Weak or unrealistic business plan
- Missing or incomplete documentation
- No financial projections or inaccurate numbers
- Business not properly registered
- Exceeding turnover or age limits
- Import-based business model
- Lack of clear innovation or technology use
- Poor credit history or blacklisting
- Inconsistent information across documents
- Missing deadline for application or bank contact
Application Timeline and Next Cycle
The startup loan application follows the government's fiscal year calendar:
- Notice Publication: IEDI publishes notice in national newspapers
- Application Window: 21 days from notice date
- Evaluation Period: 4-8 weeks for screening, presentation, and scoring
- Bank Appraisal: 10 days for site inspection and credit assessment
- Selection Announcement: Final list published on IEDI website
- Bank Contact: 30 days to initiate loan process with designated bank
- Disbursement: Within 7 working days of agreement signing
Prospective applicants should monitor IEDI announcements for the next application cycle and prepare documentation in advance.
Contact Information
Industrial Enterprise Development Institute (IEDI)
- Location: Gyaneshwar, Kathmandu, Nepal
- Website: IEDI Official Website
- Email: [email protected]
Ministry of Industry, Commerce and Supplies
- Location: Singhadurbar, Kathmandu
- Website: MoICS Official Website
Related Legal Requirements
Before applying for a startup loan, ensure your business complies with all legal requirements:
- Company Registration in Nepal
- PAN Registration in Nepal
- VAT Registration in Nepal
- Small Business Registration in Nepal
Need Legal Assistance?
Starting a business involves multiple legal and regulatory requirements. Our team can assist with company registration, documentation, compliance, and preparing your startup loan application. Contact us for professional guidance.
Frequently Asked Questions
The startup loan program is a government-backed financing scheme administered by the Industrial Enterprise Development Institute (IEDI) under the Ministry of Industry, Commerce and Supplies. Key features:
- Provides collateral-free loans to innovative startups
- Loan amount: NPR 5 lakh to NPR 20 lakh
- Interest rate: 3% per annum (concessional)
- Loan tenure: Up to 5 years
- Governed by Startup Enterprise Loan Operation Procedure, 2082
- Project proposal serves as security (guaranteed by DCGF)
Eligibility criteria include:
- Enterprise registered and operating for less than 10 years
- Registered as private firm, partnership, company, or cooperative
- Annual turnover not exceeding NPR 5 crore (50 million)
- Not an extension or branch of existing business
- Based on innovative and creative ideas with growth potential
- Has not received prior government startup loan
- Must submit complete project proposal in prescribed format
The following cannot apply:
- Enterprises already registered as industries under prevailing laws
- Import and distribution businesses
- Blacklisted enterprises under prevailing laws
- Enterprises registered after loan notice publication date
- Holding or investment companies under Industrial Enterprises Act, 2076
- Subsidiaries of existing large businesses
- Enterprises with annual turnover exceeding NPR 5 crore
Required documents include:
- Business registration certificate and renewal
- PAN/VAT registration certificate
- Tax clearance certificate
- Audited financial statements
- Citizenship certificate of authorized representative
- Detailed business plan/project proposal (Schedule-3 format)
- Proof of innovation or technology use
- Employee salary details
- Self-declaration (no prior government startup loan) Incomplete or misleading documentation leads to rejection.
Application process:
- Monitor IEDI for public notice announcement
- Register and login at IEDI official portal
- Complete Schedule-3 proposal format
- Upload all required documents
- Submit within 21-day deadline from notice publication
- Offline option: Submit hardcopy at IEDI office, Gyaneshwar, Kathmandu Only one proposal per entrepreneur or household is permitted.
Loan terms:
- Interest Rate: 3% per annum (fixed, concessional)
- Loan Tenure: Up to 5 years maximum
- Grace Period: Up to 1 year after first installment
- Bank Service Fee: Maximum 0.15%
- Early Repayment: Permitted without any penalty This is significantly lower than commercial loan rates of 10-15%.
Disbursement structure:
- Up to NPR 5 lakh: 1 installment
- NPR 5-15 lakh: 2 installments
- NPR 15-20 lakh: 3 installments First installment released within 7 working days of agreement. Subsequent installments released after utilization verification (bills, invoices, site inspection by bank).
Evaluation steps:
- Initial Screening: Eligibility verification
- Shortlisting: Sector-wise listing of eligible applicants
- Business Plan Presentation: Before expert committee (physical or online)
- Scoring: Based on innovation, growth potential, feasibility, employment creation
- Bank Credit Appraisal: Site inspection within 10 days
- Final Selection: Minimum 50% score required Selected applicants must contact designated bank within 30 days or approval lapses.
Priority sectors include:
- Agriculture and food production/processing
- Information technology and digital services
- Infrastructure and transportation/logistics
- Tourism and hospitality
- Health services and health-tech
- Education and teaching-learning technology
- Traditional and local resource development
- Manufacturing and production improvement
- Environmental solutions and waste management
- Renewable energy
Default consequences:
- Loan classified as non-performing (NPL)
- Name recommended for blacklisting (restricts access to all financial institution loans)
- Bank accounts may be frozen
- Assets subject to recovery action
- If fraud/fake documents discovered: legal prosecution Defaulting affects financial credibility for years.
No, the startup loan is collateral-free:
- No land or property required as security
- Project proposal itself serves as collateral
- Deposit and Credit Guarantee Fund (DCGF) provides loan guarantee
- Your business idea, execution plan, and innovation determine eligibility This is a key advantage making startup financing accessible to entrepreneurs without assets.
Loan recipients must:
- Use funds strictly for approved purposes
- Submit quarterly progress reports to the bank
- Submit annual reports to IEDI
- Cooperate with inspections and monitoring visits
- Display board stating "Government of Nepal's Subsidized Loan Facility"
- Maintain detailed records of fund utilization
- Report any significant changes in business operations Non-compliance can result in loan recall, blacklisting, or legal action.
Timeline estimate:
- Application Window: 21 days from notice publication
- Initial Screening and Shortlisting: 2-3 weeks
- Presentation and Evaluation: 2-3 weeks
- Bank Credit Appraisal: 10 days
- Final Selection: 1-2 weeks
- Bank Contact Deadline: 30 days from selection
- Disbursement: Within 7 working days of agreement Total process: approximately 2-3 months from application to disbursement.
Yes, new businesses can apply if they meet criteria:
- Must be registered before the loan notice publication date
- Registration must be as private firm, partnership, company, or cooperative
- Must have valid PAN registration
- Business age should be less than 10 years
- Must demonstrate innovation and growth potential
- Even if no tax filing yet (for very new businesses), mention clearly in application Note: Enterprises registered AFTER the notice publication date are ineligible for that cycle.
Key elements for approval:
- Clear Innovation: Demonstrate technology use or creative problem-solving
- Realistic Projections: Data-driven financial forecasts
- Market Understanding: Clear target market and competitive analysis
- Employment Impact: Show job creation potential
- Detailed Cost Breakdown: Explain exactly how loan will be used
- Growth Scalability: Plan for expansion and sustainability
- Complete Documentation: All required documents accurate and up-to-date
- Professional Presentation: Clear communication during evaluation Weak business plans, unrealistic expectations, and incomplete documents are common rejection reasons.
