Government Lowers Startup Loan Limit to Rs 2 Million Citing Budget Constraints

Citing budget constraints, the Government of Nepal has reduced the maximum loan amount available under the startup enterprise loan program to Rs 2 million, effective from fiscal year 2025/26. The previous upper limit, in place since FY 2023/24, was Rs 2.5 million.

The Ministry of Industry, Commerce and Supplies introduced the revision through the new Startup Enterprise Loan Operation Procedure 2082. While the maximum cap has been reduced, the minimum loan amount remains unchanged at Rs 500,000, as specified in Clause 13 of the updated procedure. Loans under this scheme will be issued against project collateral.

According to the Industrial Enterprise Development Institute (IEDI), a total of Rs 730 million has been allocated for the program in the current fiscal year. IEDI Executive Director Umesh Kumar Gupta stated that the institution is preparing to call for applications soon. The government plans to provide loans to 400 entrepreneurs this year, targeting youth, Gen Z, and women entrepreneurs.

In the previous fiscal year, 600 entrepreneurs received startup loans, while 165 entrepreneurs benefited a year earlier. In total, 765 entrepreneurs had accessed such loans up to FY 2024/25.

Although the loan cap has been reduced, banks’ administrative or service charges have been increased. Under the revised provision, banks can now charge up to 0.15 percent of the loan amount in service fees, up from the previous ceiling of 0.1 percent. However, the interest rate remains unchanged at 3 percent per annum.

So far, entrepreneurs who received startup loans have repaid Rs 24.093 million in principal and Rs 5.023 million in interest.

Initially, only Rastriya Banijya Bank (RBB) was authorized to distribute startup loans. Under the new rules, other government-owned commercial banks including Agriculture Development Bank and Nepal Bank Limited will also be permitted to issue such loans.

In areas without a government-owned commercial bank, private commercial banks designated for government transactions will be eligible to provide the loans. For this, the IEDI must enter into loan distribution agreements with the private banks.

Officials from the Ministry stated that due to limited financial resources and concerns over increasing liabilities, they have not accepted new applications for certain subsidy programs, including export subsidies for the previous fiscal year.