- Definition as per Government of Nepal (GON): –
Startup enterprises refers to any enterprises or business that uses innovative thinking and creative ideas from an entrepreneurial group to develop, produce, operate, and distribute any process, good, or service that has the potential to grow.
GON enacted Startup Enterprise Fund Procedure, 2079 along with Startup Enterprise Loan Fund Procedure 2079 to encourage start entrepreneurs and to provide concessional loans.
2. Legal Provisions: –
- Entrepreneur can get the loan by pledging its own business.
- Entrepreneur can get a loan of up to 25 lakhs rupees without collateral at an interest rate of 3% percent.
- Entrepreneur can get installment basis loan of up to 25 lakhs rupees without collateral at an interest rate of 3% percent.
- Registered and in operation, but for no more than 7 years before the publication of this notice,
- Ministry of Department of Industry (DOI) will provide the amount of the fund to NRB and the companies will be able to get the loan amount from the commercial bank designated by the National Bank.
3. Sectors open for startup enterprise: –
- Tourism promotion,
- Entertainment and hospitality,
- Agriculture and livestock,
- Forest production,
- Science, Technology,
- Information and communication,
- Human health,
- Education, Teaching
- Easy and safe transport, Automobile,
- Traditional technology,
- Production and service delivery,
- Mining and mineral research and development,
- Household or daily living,
- Food production,
- Processing waste management and environment protection,
- Disaster management,
- Alternative and renewable energy,
- Climate change mitigation.
4. Criteria for application of Startup Enterprises
- Fulfil at least 3 of the following criteria from (a-d)
- a) Paid-up Capital: Paid-up capital of no more than NPR 50 lakhs.
- b) Gross Income: Gross income of no more than NPR 50 lakhs.
- c) Fixed Capital: A maximum of NPR 2 crores in fixed capital (excluding land and buildings).
- d) Expense Allocation: At least 5% of total expenses are allocated to product development, market research and development.
- Fulfill at least 2 of the following criteria from (e-g)
- e) Information Technology Use: In order to provide products or services that have been developed in order to address customer concerns,
- f) Expense Allocation: At least 5% of total expenses are allocated to product development, market research, and development.
- g) Protection of Intellectual Property: Either intellectual property of products or services is registered as a patent, design, or software, or it is eligible to be registered as any of these.
5. Eligibility for startup loan
- Business up to NPR 50 lakhs as a paid up capital.
- Entrepreneurs who have been registered as per existing law.
- Until the last date of application, business which has not exceeded 7 years.
6. Circumstances in which startup enterprises are not eligible for the loan
- Enterprise has not been legally registered in Nepal,
- The enterprise is importing goods and services from overseas, failing to use the technology and innovation available in Nepal,
- Enterprise is a subsidiary company of an existing company/business,
- Enterprise has been blacklisted in Industrial Enterprises Act,2076
- Enterprise does not have a PAN for tax purposes,
- Enterprise is classified as a medium-large holding company as per the Industry Enterprises Act, 2076.
7. Duty of Enterprises
- The money from the loan should only be used for the specified purposes.
- Entrepreneur are responsible for paying the loan amount and interest amount.
- Responsibility to provide the lending bank with a quarterly status report on the startup business.
- During regulatory body and bank monitoring, provide the required information and data.
- Send an annual report on the startup’s development to the lending bank and committee secretariat.
- If the loan is not repaid within the specified time, the bank can recommend to the concerned agency for action and such loan can be counted as a bad loan.
- Suspension of the entrepreneur’s passport to suspension of movable and immovable property are specified in the procedure.
- The government has the authority to suspend social security benefits and freeze bank accounts.
- Display a board at the project site with the words “Government of Nepal’s Subsidized Loan Facilities” for public awareness.
Startup Entrepreneurship in Budget of fiscal year-2081/2082
- Support for startup business: allocated fund-Rs 1.25 billion.
- Startup ecosystem shall be developed for the growth of economic innovation and entrepreneurship.
- Venture capital and private equity fund shall be encouraged to invest in startup enterprises.