Government asks startups to submit proposals for subsidised fundingProspective startups will get loans up to Rs2.5 million at 3 percent interest.
The Industrial Enterprise Development Institute has invited startups to submit their proposals to get subsidised loans. This is the third time that the notice has been issued for startups since the plan was announced in 2020.
The Industrial Enterprise Development Institute, which has been established under the public-private-partnership model to empower entrepreneurs and industries, on Friday invited startups with innovative knowledge, ideas, skills and capacity to submit proposals by February 22.
The programme will be implemented by mid-May.
Prospective startups have been promised loans of up to Rs2.5 million at 3 percent annual interest.
The institute said it is expecting around 1,000 applications. A budget of Rs250 million has been allocated for the programme.
“We are hopeful that the selected startups will get the subsidised loan by mid-May,” said Sundar Shyam Ghimire, the focal person at the institute, who oversees the start-up enterprise loan operation programme.
“The working procedure for the startup loan has also been approved. A budget has also been allocated,” Ghimire said.
With a few changes in the working procedures in the current fiscal year, the institute is expecting a larger number of applications.
In the last fiscal year, the government had shortlisted startups eligible for the subsidised loan, but the initiative was cancelled later after the government did not allocate any budget.
Drawing lessons from last year’s failure, the institute has been working on the programme by making time-bound plans, Ghimire said.
“So, we are confident that the shortlisted startups will get the subsidised loan this fiscal year,” he said.
The institute has formed a committee for shortlisting the applicants. The committee has representatives from the Industry Ministry, Rastriya Banijya Bank and experts.
“In the lack of manpower and online infrastructure, we did not invite applications online. The applicants have to submit their proposals physically,” he said.
Once the applicants are shortlisted, a notice will be published for inviting them to showcase their projects. The project will be evaluated and sent for credit appraisal to the Rastriya Banijya Bank.
The final selection will be made once the bank sends the credit appraisal.
“After the startup projects are approved, the institute will provide them recommendations so that they can apply for the subsidised loan,” Ghimire said.
“We are expecting to complete all processes within three months,” he said. “Things, however, will depend on the number of applications.”
The Startup Enterprises Credit Fund Working Procedures was approved on January 25 by the Industry Ministry, clearing the way for startups to get subsidised loans for the current fiscal year.
The government introduced the new rulebook cancelling last fiscal year’s working procedures.
The 212 proposals from startups selected last fiscal year, however, are ineligible to get subsidised loans this year and they have to apply again.
On February 22 last year, the ministry approved the working procedures.
Subsequently, on March 30, the Department of Industry invited startups with innovative knowledge, ideas, skills and capacity to submit proposals by April 19.
There were 425 proposals and it took more than a month to evaluate them.
However, the department did not receive the pledged budget of Rs250 million from the industry ministry and was subsequently cancelled.
This fiscal year too, which started in mid-July 2023, the government continued the scheme by allocating a budget of Rs250 million.
To be eligible for the subsidised loan, hopeful startups should have been registered with the government before the publication of the notice, and they should not have crossed seven years of operations.
According to the working procedure, a loan of up to Rs2.5 million will be provided at a 3 percent interest per annum. The banks will provide loans up to Rs500,000 and startups should pay it back in a single instalment. Similarly, loans up to Rs1.5 million can be paid back in two instalments and a loan up to Rs2.5 in three instalments.
The plan, as originally announced by the National Planning Commission in May 2020, was to provide Rs5 million to each startup at 2 percent interest.
The planning commission, which makes the country’s development plans and policies, had received more than 600 proposals, but the scheme unravelled.
Startups, who have submitted their proposals on different occasions to the government to obtain subsidised loans, say the government has been duping them since the beginning.