661 businesses just secured a government-backed startup loan in Nepal. What’s next? Unpacking the opportunity, the risks, and the road ahead.

Imagine this: You’ve been working on your startup idea for months, maybe even years. You’ve pitched, saved, borrowed, and bootstrapped your way through sleepless nights, all for a chance to build something that matters.

Now imagine getting a call that the government wants to back you with up to Rs. 2.5 million in funding at just 3% interest.

That’s exactly what just happened for 661 startups in Nepal. Click here to check out the full list

Through the Startup Enterprise Loan Program 2081, the Industrial Enterprise Development Institute (IEDI) has shortlisted hundreds of entrepreneurs to receive concessional loans, and with it, a lifeline to scale their dreams.

But here’s the twist:This program wasn’t always supposed to be a loan. It started as a grant. And while the funding is still a massive win, it comes with expectations, paperwork, deadlines and lots of pressure.

So what does it really mean to be selected? What should these founders do next? And is this finally the shift Nepal’s startup scene has been waiting for?

Let’s unpack it all: how the program works, why it matters, where it falls short, and what it signals for the future of startup business in Nepal.

The Startup Loan Program: A Quick Recap

If you’ve been following the news in Nepal’s startup space, you’ve probably heard about the IEDI Startup Loan Program, but let’s refresh the basics.

The program is part of a larger government initiative to promote entrepreneurship and self-employment across the country. It offers low-interest loans to early-stage, innovative businesses that demonstrate potential for job creation and economic value. Backed by the Ministry of Industry, Commerce, and Supplies, this program aims to bridge one of the biggest gaps in the startup ecosystem: access to affordable capital.

Key Features at a Glance:

So, this is not just a loan, it’s an opportunity for transformation.

From Over 5,000 Applications to 661 Finalists: The Journey So Far

Let’s rewind a bit.

In August 2024, the government opened applications for what many now call the most startup-friendly initiative Nepal has launched to date. The response? Over 5,158 startups applied between August 27 and September 16, each hoping to secure a spot in this groundbreaking program.

From this massive pool:

• 1,314 applicants were shortlisted for the preliminary evaluation list.
• These startups were then invited to make a formal presentation, including videos, financials, and business pitches.
• Startups presented their ideas, which were then evaluated by a high-level committee based on merit, innovation, and other aspects.
• Ultimately, 661 startups were selected for loan recommendation.

It’s a rigorous process that filters out the noise and identifies the businesses with true potential.

What Qualifies as a Startup? It’s Not What You Might Expect

Before we move on, let’s clear up a key question:

What exactly does “startup” mean under this government-backed loan program?

Most of us think of startups as new, small, often tech-driven businesses. But for the purposes of the IEDI Startup Loan Program, the definition is a bit different, and more specific.

Who Qualifies?

Under the Startup Enterprise Loan Procedure 2081, a startup must:

• Be officially registered as a private firm, partnership, company, or cooperative
• Be less than 10 years old
• Have annual turnover below Rs. 15 crore
• Not be a spin-off of a closed or split business
• Be built on innovative or creative ideas with potential for fast growth
• Possibly use technology or new methods in how it operates

So it’s not just about being small or new, it’s about doing things differently.

Who Doesn’t Qualify?

Even if your business feels like a startup, you may not qualify if:

• You’re not registered as an industrial enterprise
• You import goods/services for resale
• Your company is on the government’s blacklist
• You registered after the loan notice was published
• You’re a holding or investment company

In short: retail importers, unregistered businesses, and late applicants are out.

For a full breakdown, check out: Government Finally Defines “Startup” Business in Nepal

What’s Next for the Selected Startups?

So, your startup made it to the top 661. Now what?

Here’s a step-by-step guide on what these entrepreneurs must do to actually receive the loan and kickstart (or accelerate) their business journey.

1. Wait for Bank Branch Allocation Notice

IEDI has already sent the list of recommended startups and their respective loan amounts to the Central Office of Rastriya Banijya Bank (RBB). Each entrepreneur will be assigned a convenient RBB branch to process the loan.

The official branch allocation will be published by 25th Baisakh 2082 on the IEDI website.

2. Prepare the Required Documents

Before heading to the bank, entrepreneurs must gather the following:

• Business registration and renewal certificates (original)
• PAN/VAT certificate (original)
• Citizenship certificate of the entrepreneur (original)
• Tax clearance for FY 2080/81
• Three passport-size photos of the authorized personnel
• Official business stamp/seal
• If operating on leased property: lease agreement and relevant permissions 

Not sure how to register your startup or whether you qualify as one? Read this detailed guide on how the Government of Nepal now defines startup business, and what it means for your funding journey.

3. Visit the Bank Within 45 Days

Once the notice is published, selected entrepreneurs must visit their assigned RBB branch within 45 days with the above documents. Failure to do so means automatic cancellation of both the project recommendation and loan amount.

4. Loan Processing and Disbursement

As per Sections 13(1) and 13(7) of the Startup Enterprise Loan Operating Procedure, the bank will conduct final credit checks and issue the loan under the stated terms.

Important: If the entrepreneur has already received concessional loans from another institution and has not fully repaid it, they are ineligible under this program (as per Section 8(5)).

What Kinds of Startups Got Selected?

While the IEDI notice doesn't categorize startups by sector in detail, a preliminary scan of the list reveals a few notable trends:

• Manufacturing and agro-processing businesses were strongly represented
• Many innovative product-based companies (especially rural or semi-urban) stood out
• Agri-tech and food startups continue to dominate due to their alignment with self-reliance goals
• IT and software businesses also made it through, showing the growing trust in tech-enabled startups

There’s also an encouraging mix of rural and urban enterprises, suggesting that the program is helping decentralize innovation beyond the Kathmandu Valley.

What Makes This Special for Startup Business in Nepal?

Let’s be honest. Running a startup business in Nepal is not for the faint of heart.

From navigating bureaucratic red tape to struggling with limited funding options and unpredictable market conditions, countless promising ideas in Nepal never make it past the drawing board. And it’s not because the founders lack passion or potential, it’s because they lack the support to turn vision into reality.

That’s exactly why this startup loan in Nepal is such a big deal.

This is more than just money. It’s a signal of belief, a vote of confidence from the state that says, “We see your hustle. And we’re here to back it.”

Here’s why it matters:

• It empowers innovation. Finally, entrepreneurs can dream beyond survival and towards impact, creativity, and real change.
• It pushes businesses to go formal. No more operating in the shadows. With funding on the table, more startups are encouraged to register, comply, and grow.
• It offers real, affordable capital. A 3% interest rate? That’s unheard of in traditional banking channels.
• It connects startups to government support. For once, entrepreneurs don’t feel invisible. They’re being recognized, supported, and guided.
• It builds long-term sustainability. This isn’t a quick fix. It’s a chance to build a strong, lasting foundation.

For many founders, this is the first time someone has said “yes”, the first time they can move from side hustle to full-time founder, from an idea on paper to a product on shelves.

And that changes everything.

A Word of Caution: This Loan Is Not a Grant

Before we celebrate too hard, here’s a reality check every selected entrepreneur needs to hear:

Yes, getting approved for a startup loan in Nepal is a big achievement. But it’s important to remember: this is a loan, not a grant. It’s not free money. You’ll need to repay the principal along with 3% interest, and if you miss your deadlines, recovery actions will kick in, as outlined in  Section 15(2) of the loan procedure.

So, by all means, celebrate your selection, but also get ready to roll up your sleeves.

Here’s what should be at the top of your to-do list:

• Get your paperwork in order
• Refine your business model and financial plan
• Set clear, realistic goals and milestones
• Build a support team (mentors, advisors, legal/accounting experts)
• Track your cash flow like your business depends on it, because it does

A well-managed loan can unlock serious growth. But unmanaged debt? That can derail even the most promising startup faster than you think.

What Started as a Seed Fund Became a Loan

Here’s something many people might not know: the original vision for this initiative was not a loan at all, it was a grant. In early discussions and drafts, the plan was to provide non-repayable seed funding to promising startups, similar to what countries like India and Rwanda offer to fuel innovation.

Somewhere along the way, that vision changed.

Instead of free capital to take risky but high-impact bets, we now have a concessional loan. Still valuable, still helpful, but not quite the same. The shift from grant to loan brings its own set of implications:

• The risk is now on the entrepreneur. Many of the selected startups are still just getting started, some are still developing their product or figuring out their business model. Asking them to take on debt this early means they carry all the risk, without any guarantee that things will work out.
• Loans add pressure. Nepal’s market is unpredictable. There are frequent policy changes, infrastructure issues, and economic ups and downs. When startups have to start paying back a loan in this kind of environment, it can add a lot of stress and uncertainty to an already risky journey.
• It limits bold ideas. Startups are supposed to experiment, try new things, and take risks. But if they have a loan to repay, they might feel forced to “play it safe” just to make enough money for repayments. That can hold them back from building something truly innovative or disruptive.

That doesn’t mean the program isn’t worth celebrating, it absolutely is. But it's worth noting that startups aren’t like traditional businesses. They thrive on risk, creativity, and long-term vision, not quarterly repayments. A grant would have acknowledged that reality more fully.

Still, for what it is, this loan program is a massive leap forward.

It shows the government is finally recognizing that startups are not hobbies, they’re national assets. They create jobs, attract investment, solve real-world problems, and build economic resilience. This program signals a shift toward that understanding, even if it hasn’t gone as far as it could have.

For a deeper dive into why Nepal’s tax law favors grants over investments, and how that one word is holding back true innovation, read this related article: Seed Capital for Startups in Nepal: Grant or Investment? Let’s Fix It Now

A Big Step Forward But There’s More to Do

There’s no denying it: the IEDI Startup Loan Program is a major win for Nepal’s startup ecosystem.

For the 661 startups that made the list, this marks a big step forward. And for those still waiting or preparing for the next round, this is proof that the system is finally beginning to support innovation in a real, structured way.

But let’s not forget: this is just the beginning.

A startup loan in Nepal with 3% interest is a great opportunity, but it’s still a loan. And for early-stage entrepreneurs, debt can bring pressure that limits bold thinking. Many of these startups are still in the idea or testing stage. What they often need is time, support, and breathing room, not just repayment deadlines.

And that’s where the original vision of this program being a grant still lingers in the background. A grant would’ve allowed founders to take more creative risks. Hopefully, future iterations of this program can blend both models; grants for early-stage ideas, and loans for growth-stage startups.

Because that’s how Nepal truly builds not just more businesses, but a thriving, sustainable startup culture.

So whether you got selected or not, keep building, keep learning, and don’t stop dreaming.

Nepal’s next big thing might just be yours.

Additional Resources:

• ‘Grant’ or ‘Investment’ in Startups to Lower Tax Rate in Nepal!
• The Complete & Full Guide on Starting a Business in Nepal
• Government Finally Defines “Startup” Business in Nepal