Nepal approves 661 entrepreneurs for 3pc interest startup loans

KATHMANDU: In a significant boost for Nepal’s entrepreneurial ecosystem, the Industrial Enterprise Development Institute (IEDI) has recommended 661 entrepreneurs for startup loans at a 3% interest rate for the 2024/25 fiscal year. Announced on Sunday, the initiative, backed by a NPR 1 billion budget, aims to fuel innovation and job creation, though recipients must act swiftly to secure funds or risk cancellation.

The IEDI’s notice mandates that selected entrepreneurs contact designated bank branches within 45 days, or their project proposals and loan recommendations will be voided. A detailed list specifying which entrepreneurs should approach particular bank branches will be published by Thursday. The loans, ranging from NPR 500,000 to NPR 2.5 million, are collateral-free, designed to support small-scale ventures. The budget allocates NPR 30 million for administrative costs, NPR 194 million for loan insurance, and NPR 776 million for direct lending, according to the Ministry of Industry, Commerce, and Supplies.

This year’s program builds on last year’s success, where 165 entrepreneurs received NPR 210 million, with NPR 18 million repaid. Ministry data shows these ventures created an average of 4 to 5 jobs each, underscoring the program’s potential to drive employment in a country where 19% of the population lives below the poverty line. The initiative aligns with Nepal’s push for economic diversification, with startups seen as vital to reducing reliance on remittances, which accounted for 28% of GDP in 2024.

Entrepreneurs must provide original documents, including business registration, PAN/VAT certificates, citizenship, tax clearance, and relevant permits, to access loans. The selection process began on August 27, 2024, when the IEDI received 5,158 project proposals. By January 2, 2025, 1,314 candidates were shortlisted for presentations, with 1,073 pitching between late January and mid-March. A rigorous evaluation, combining scores from the IEDI’s committee and bank credit appraisals, prioritized candidates scoring above 50%, ensuring only viable projects advanced.

The program has sparked optimism among Nepal’s startup community, but experts stress the need for robust support systems. “Low-interest loans are a game-changer, but mentorship and market access are critical for success,” said a Kathmandu-based entrepreneur. The private sector urged the government to streamline bureaucratic processes, citing past delays in loan disbursements.

Challenges remain, including limited financial literacy among applicants and uneven banking infrastructure in rural areas. With only 3% of Nepal’s GDP invested in innovation, scaling such initiatives could position the country as a regional startup hub. The IEDI’s transparent selection process, incorporating project visuals, financials, and panel evaluations, aims to ensure accountability and impact.

As Nepal battles unemployment and youth migration—over 30,000 leave monthly for foreign jobs—the startup loan program offers a lifeline for aspiring entrepreneurs. Stakeholders hope the initiative will foster sustainable businesses, particularly in tech, agriculture, and tourism, which contribute 6% to GDP. With the 45-day deadline looming, the selected 661 entrepreneurs face a critical window to transform their visions into reality, potentially reshaping Nepal’s economic landscape.