business

Government Finally Defines “Startup” Business in Nepal

by Khatapana

Mar 17, 2025 - 7 min read

Government Finally Defines “Startup” Business in Nepal

If you’ve ever tried to start a business in Nepal, you know how it goes. You come up with an idea, build a plan, maybe even launch a prototype, but then reality hits you like a brick wall.

No access to funding.
No clear policies.
No support system.

Worse, people look at you like you’re doing something strange just because you chose to build a startup instead of flying off to Australia or taking a bank job. Sound familiar?

And while politicians and bureaucrats love to throw around fancy phrases like “youth entrepreneurship” and “startup ecosystem,” on the ground, most startup founders in Nepal are left to figure things out on their own.

But maybe, just maybe, things are starting to shift.

For the first time ever, the government has introduced a formal definition of what qualifies as a startup business in Nepal. That may sound small, but it could be the beginning of something big. Because definitions matter. Once something is defined in policy, it can be supported, nurtured, and scaled.

In this article, we’ll walk you through what this new definition means, what benefits you could actually get (including startup loans and tax exemptions), and whether this move is just another promise or the real deal.

What is a Startup Business in Nepal?

Let’s start with the basics.

According to the recent amendment in the Industrial Enterprise Regulation, you can now officially qualify as a startup business in Nepal if:

  • Your business is less than 10 years old
  • Your annual revenue is below Rs 15 crore (Rs 150 million)

Once you meet these two criteria, you can apply for a Startup Business Certificate, which officially places your business in the startup category under government policy.

This certificate is more than just a piece of paper. It’s now your gateway to accessing certain government benefits like loans, training support, and possibly tax exemptions.

But is it really that simple? Let’s dig deeper.

Why This New Definition Matters

You might be wondering “what’s the big deal in just defining a startup?”

Well, in Nepal, everything begins with how the government sees you. Without legal recognition, you’re just another small business. But with this new classification, startup businesses in Nepal can now be treated differently, and better.

It’s the first step toward building a structured startup ecosystem, where innovators get special support, faster access to finance, and fewer compliance headaches. It also helps attract investment, both domestic and foreign.

Think about it: a defined startup sector signals that Nepal is serious about entrepreneurship.

What Benefits Can You Actually Get?

This is where the Government’s promises start getting more interesting. Let’s look at the two major incentives: Startup Loans and Tax Benefits.

Government Startup Loans in Nepal

The most promising support right now is the collateral free subsidized loan by the Nepal Government as per the Startup Enterprise Credit Operation Work Procedure 2024. Under this scheme, the government has allocated Rs 1 billion for startup funding. But the introduction and implementation has its own story: 

Background and Evolution: A Long Road of Promises

The idea of a dedicated startup loan program in Nepal has been floating around for nearly a decade. However, most of the early announcements were either delayed, poorly implemented, or never executed at all. Here's a quick look at the chronology of how it all unfolded:

2015–16: The First Promise

  • The government announced a Rs 50 crore startup challenge fund to support young entrepreneurs.
  • However, this never materialized. No clear guidelines, no disbursement mechanism, and no access for real startups.

2019–20: The Cash Subsidy Dream

  • A new plan offered cash subsidies of up to Rs 5 million to promising startups.
  • Again, this remained only on paper, as the implementation mechanism was never fully developed or executed.

2020–21: Low-Interest Loan Proposal

  • A startup fund of Rs 500 million was introduced, offering loans at just 2 percent interest.
  • However, this too got limited to a proposal due to bureaucratic red tape, unclear eligibility criteria, and inconsistent communication from the authorities.

2023–24: Momentum Builds

  • The government began taking serious steps to structure the ecosystem.
  • The Startup Enterprise Policy 2024 was introduced to attract foreign and non-resident Nepali investors and promote structured support systems.

2024–25: The Startup Enterprise Credit Operation Work Procedure Gets Rolled Out

Finally, in the last fiscal year, the government has formally rolled out the startup loan scheme, marking the first time such a program has been implemented with a clear budget, guidelines, and partnerships.

Key Highlights of the Current Program:

Feature

Details

Total Fund Allocation

Rs 1 billion (Rs 100 crore)

Loan Amount Range

Rs 500,000 to Rs 2.5 million (Rs 5–25 lakh)

Interest Rate

3 percent per annum

Repayment Period

Up to 5 years

Repayment Start

Begins 1 year after first loan installment

Implementation Mechanism:

  • Loans are disbursed via Rastriya Banijya Bank (RBB).
  • Deposit and Credit Guarantee Fund (DCGF) ensures loan security.
  • Startup Enterprise Loan Operating Guidelines 2024 provide the legal and procedural framework.

Application and Disbursement Process:

  • The Industrial Enterprise Development Institute (IEDI) was tasked with shortlisting eligible startups.
  • In FY 2024–25, IEDI received 5,158 applications.
  • 183 startups were shortlisted, and 165 received actual loan disbursements, totaling Rs 190.40 million.
  • Most loans were directed towards agriculture-based startups, reflecting the government's push toward self-reliance and rural entrepreneurship.

In FY 2025–26, IEDI received 5,250 applications for startup enterprise loans. In the first phase, 1,314 projects have been shortlisted and forwarded for further evaluation. The government has allocated Rs 1 billion for this subsidized loan program, offering up to Rs 2.5 million per startup at a 3% interest rate.

Why This Matters Now

For the first time, startup loans in Nepal are not just a promise but a functioning reality, even if still limited in scale. This move not only helps early-stage businesses but also builds a formal financing track for entrepreneurial innovation.

While the program still needs scale, transparency, and consistency, this is the first credible step in implementing a startup-friendly credit policy in Nepal.

Tax Exemption: Great on Paper, But Does It Work?

The other highlight is the 100 percent tax exemption for startups for 5 years. Sounds fantastic, but here’s the twist.

  • Most startups don’t earn profits in the early years, so there’s no tax to exempt.
  • You need to be designated a “startup” by the Tax Department.
  • The process to get this designation is unclear and confusing.

So, while this benefit exists in theory, many entrepreneurs say it’s practically inaccessible. There’s no application form, no detailed process, and no clear guidelines.

It’s like being invited to a party that no one has actually organized.

What’s Still Holding Back Startup Business in Nepal?

Despite some progress, the journey for startups in Nepal is still full of hurdles. Here are the main ones:

  • Lack of Implementation Clarity: Policies exist, but execution is poor.
  • Political and Economic Instability: Changing governments often delay or dilute programs.
  • Limited Access to Investors: Angel investors are rare, and venture capital is mostly non-existent.
  • Youth Migration: The best talent is flying abroad, leaving fewer risk-takers at home.
  • History of Broken Promises: Past announcements of startup funds or subsidies often ended in disappointment.

These challenges discourage young entrepreneurs and often push them to give up or go abroad.

What Can Really Strengthen the Startup Ecosystem in Nepal?

If Nepal wants to truly promote startup culture, we need more than just definitions and promises. Here’s what could actually make a difference:

  1. Transparent Application and Certification Process
  2. Awareness Campaigns and Training Programs
  3. Startup-Friendly Tax Policies with Clear Guidelines
  4. Investor Networking Platforms
  5. Digital Portals for Loan Application and Tracking
  6. Regional Startup Incubators Beyond Kathmandu
  7. Inclusion of Women and Rural Entrepreneurs
  8. Public-Private Partnerships for Investment Support

Building a startup business in Nepal should not feel like a lonely road. It should feel like a supported journey backed by community, policy, and opportunity.

Real-Life Impact: What This Means for You

Let’s say you have an idea for an agri-tech solution, an online tutoring platform, or a digital delivery business. Under the new system:

  • You can register officially as a startup.
  • Apply for a low-interest startup loan of up to Rs 25 lakh.
  • Get government recognition, which builds your credibility.
  • Possibly attract investors or partners more easily.
  • Explore future tax benefits if you start generating profits.

That’s not just policy on paper. That's the actual impact, if implemented right.

Final Take: A Step in the Right Direction

There’s still a long way to go, but this move gives hope. The government has laid the foundation for recognizing the startup economy as an engine of growth.

For anyone thinking about launching a startup business in Nepal, this is the time to act. Stay informed, prepare your documents, and be ready to apply as more details and loan procedures become public.

Remember, definitions are just the beginning. Real success comes from execution. But at least now, we have a starting point.

Don’t Miss Out: Get Your Startup Registered Right and Stay Compliant

If there’s one thing this new startup policy makes clear, it’s this — you must be legally recognized to benefit from government support.

Whether you’re eyeing that 3 percent startup loan, hoping to claim future tax exemptions, or simply want to build trust with partners and investors, having your Startup Business Certificate is a must.

But here’s the catch:
Without proper business registration, clean documentation, and full legal compliance, you could miss out — no matter how innovative your idea is.

That’s Where Khatapana Comes In

Khatapana is your growth partner for startup business in Nepal, helping you navigate the legal, financial, and compliance landscape with ease. Whether you’re just starting out or scaling up, we’ve got your back.

Here’s how Khatapana can support you:

  • Business registration and documentation support
  • Compliance and audit guidance
  • Financial recordkeeping and digital accounting
  • Application support for Startup Business Certification
  • Advisory for accessing startup loans and government schemes

Don’t let paperwork stand in the way of your passion.

Let Khatapana help you build a strong foundation, so when opportunity knocks, you’re ready to open the door.

Download our app and speak to our experts today to get started with your startup journey the right way.

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