After years of anticipation, Nepal's government has delivered on its promise to support the country's burgeoning startup ecosystem. Through the Startup Enterprise Loan program, the government has disbursed over NPR 170 million to 165 startups. This move marks a significant milestone in promoting entrepreneurship and innovation in Nepal.

A Long-Awaited Commitment

Back in 2015, the Nepalese government committed to fostering a supportive environment for startups, promising financial aid and other resources to young entrepreneurs. However, the implementation of this promise faced numerous delays. The responsibility for distributing startup loans shifted hands multiple times—from the National Planning Commission to the Department of Industries—before finding a stable footing with the Industrial Enterprise Development Institution. This year, the program has seen successful execution, overcoming past administrative hurdles.

Current Disbursement and Future Prospects

Out of the 183 projects selected, 165 startups have received their loans, with a few still awaiting their funds. The disbursement has been structured to provide each startup with an initial installment of NPR 500,000. The rest of the funds will be allocated based on the progress and specific needs of each project. Although some projects have been disqualified due to non-compliance, the overall execution of the program has shown promising results this year.

Challenges and Concerns

While the government has made strides in supporting startups, there are still concerns about the breadth and focus of the program. The application pool included a diverse range of businesses, from tech startups to traditional SMEs like meat shops and retail stores. This raises questions about the criteria used to prioritize truly innovative ventures that align with the program's original goal of fostering groundbreaking business ideas.

Key Features of the Startup Loan Program

• Loan Structure: The program offers loans ranging from NPR 500,000 to NPR 2.5 million at a favorable interest rate of 3%. Loans up to NPR 500,000 are disbursed in a single installment, while larger amounts are distributed in up to three installments.
• Collateral and Security: Loans are collateral-free, with the project itself serving as security. However, startups must provide insurance for their projects.
• Eligibility and Application: To qualify, startups must have been registered for less than seven years, with specific criteria regarding capital, income, and employment numbers. The application process requires a thorough business proposal outlining how the funds will be used.
• Repayment Terms: The loans have a maximum repayment period of seven years, with repayments starting after the second year.

Looking Ahead

The government has also announced plans for a NPR 1 billion 'Nepal Startup Fund' to further support startups. This initiative, along with the creation of a startup board and incubation centers, indicates a continued commitment to nurturing Nepal's entrepreneurial landscape. However, for these efforts to be truly effective, the government needs to address the current program's shortcomings and focus more on innovation-driven startups.

The disbursement of NPR 170 million to 165 startups is a step in the right direction for Nepal's entrepreneurial ecosystem. While there is still room for improvement, this initiative lays the foundation for fostering a vibrant startup culture. With strategic refinement and a focus on innovation, Nepal's startups have the potential to make significant contributions to both the national and global economies​.