The Department of Industry has invited start-ups to submit proposals for subsidised loans, but potential applicants are sceptical after a similar initiative by the National Planning Commission two years ago came to nothing.

Participating start-ups have been promised loans of up to Rs2.5 million at 3 percent interest.

Firms that applied for the credit plan announced by the National Planning Commission but were never called say it is another political stunt.

“We submitted a 60-page-long proposal to the National Planning Commission to get the subsidised loan, but the scheme was a non-starter,” said Ramesh Timilsina, co-founder of Skill Sewa, a home inspection company that provides services like construction, interior design and home repair.

On Thursday, the department invited start-ups with innovative knowledge, idea, skill and capacity to submit proposals by April 19.

Under the scheme announced by the National Planning Commission in May 2020, firms would get Rs5 million at 2 percent interest. The agency that frames the country’s plans and policies had received more than 600 proposals. Start-ups say the government duped them.

“We never received the money. We are not going to apply for funding anymore although we need it,” said Timilsina. “It’s a political stunt rather than help for start-ups.”

Timilsina has no hope that the programme will come into implementation.Ram Chandra Tiwari, director general of the Department of Industry, says they plan to provide subsidised loans to 100 enterprises in the current fiscal year ending mid-July.

The department expects to receive around 400 applications. A budget of Rs250 million has been allocated for the programme.

But newly established businesses say they don't trust the government or the private sector either.

“The government and even the private sector have lost credibility with regard to providing funding for start-ups. They make pledges that remain on paper,” said Kavi Raj Joshi, founder managing director of Next Venture Corp.

“The application process is lengthy and full of hassles,” Joshi said. “Many start-ups say that they are not interested in applying for the loan.”

According to Joshi, the Federation of Nepalese Chambers of Commerce and Industry, the apex private sector body, had once called for applications for funding too.

“Entrepreneurs feel that the business environment in the country is not start-up friendly,” said Joshi, who is also an invitee member of the federation’s Start-up and Innovation Committee.

Millions in investments were committed during the Confederation of Nepalese Industries Young Entrepreneurs Forum Nepal Start-up Fest 2022 held in June last year. That too was a non-starter.

As per the latest credit scheme unveiled by the Industry Department, the repayment period starts after three years and should not extend more than seven years.

The successful applicants will receive the money in two instalments, half now and half later.

The sectors eligible for the subsidised loan as determined by the work procedure are businesses related to agriculture and livestock, forest (herbs), tourism promotion, entertainment and hospitality, information technology and communication, health service, and education.

Other sectors are transportation and goods carrier services, infrastructure construction, automobile, traditional technology, production and services, mine and food production and processing and management of waste and environment.

Hopeful start-ups should have been registered before the publication of the notice, and they should not have crossed seven years of operations.

Their paid-up capital should not be more than Rs5 million, and their annual gross income should not exceed Rs5 million.

Their fixed capital (except home and land price) should not exceed Rs20 million, and the number of full-time workers should not exceed 10.

The start-ups need to submit documents such as a copy of the company registration certificate, permanent account number, certificate of tax clearance and citizenship certificate of the authorised person of the company.

The Start-up Enterprises Credit Fund Working Procedure prepared by the Ministry of Industry was approved on February 22.

Timilsina says that the working procedure has not clearly defined what is a start-up. Lack of a clear policy regarding start-ups has created a lot of confusion, making the implementation of the working procedure difficult, he said.