Information and technology-related startups make up the largest share of applicants seeking subsidised loans under the government’s programme to groom new ventures, with officials reporting an unprecedented surge in interest this year.

The Industrial Enterprise Development Institute (IEDI) received 10,244 applications for subsidised start-up loans by the final deadline of November 26. The call for proposals was issued on November 5, and 8,203 of the applications were submitted online.

“In the past two years, nearly 45 percent of proposals were for agriculture-related startups. This year, however, most applications are from IT startups, including those developing mobile applications,” said Umesh Kumar Gupta, executive director of IEDI.

Alongside agriculture, tourism, and information technology, energy-related startups also submitted a high number of proposals, Gupta said.

Eligible sectors include agriculture and livestock, forest-based businesses such as herbs, tourism promotion, entertainment and hospitality, information technology and communication, health services, and education.

Other categories cover transportation, goods carriers, infrastructure construction, automobiles, traditional technology, production and services, mines, food processing, waste and environmental management, renewable energy, climate change mitigation, and disaster management.

The assessment committee will evaluate the proposals based on set criteria before IEDI publishes a preliminary list of selected applicants and calls for business presentations.

“We plan to complete the loan processing by January,” Gupta said. The loans will be issued through Rastriya Banijya Bank at an annual interest rate of 3 percent.

Both IEDI and the bank have been monitoring enterprises that previously received subsidised loans. Borrowers must use the funds as proposed, repay instalments on time, provide required data during inspections, and submit quarterly progress reports. Banks may recommend action against defaulters, and accounts of non-compliant startups may be suspended. Banks are allowed to charge a service fee of up to 0.1 percent of the loan amount.

Last fiscal year, IEDI received 5,120 proposals, of which 600 enterprises received loans out of 661 recommended. In 2023–24, 165 enterprises received loans out of the 183 recommended. Over the past two fiscal years, 765 enterprises have received Rs770 million in subsidised loans, with Rs28.2 million repaid so far.

Under the Startup Enterprises Credit Operation Working Procedure, 2025, firms older than 10 years are no longer classified as startups. A startup also loses its status if its annual transactions exceed Rs150 million.

Despite rising demand, the government this year reduced the maximum loan amount to Rs2 million, down from Rs2.5 million. IEDI had requested Rs1 billion for the programme but received only Rs730 million, which officials say is insufficient given the growing number of applicants.

Experts warn that cutting the subsidised loan budget risks discouraging innovation at a time when banks have adequate liquidity and interest rates remain low.

Niraj Khanal, a member of the Startup and Innovation Forum at the Federation of Nepalese Chambers of Commerce and Industry, said it is positive that the programme continues but noted that raising, rather than lowering, the loan ceiling would better support entrepreneurs.

“The government can also collaborate with venture capital and angel investors to strengthen the sustainability of the startup programme,” said Khanal, who is also CEO and co-founder of Antarprerana, an organisation that supports startups through investment and mentoring. He added that the current political situation has not significantly affected startup sentiment.

Entrepreneurs argue that, amidst political instability, the government should incentivise new business ideas and that now may be an opportune moment to strengthen the ecosystem.

To qualify for the subsidised loan, a startup must have been registered before the notice was published and be less than seven years old. Additional criteria include paid-up capital and annual income below Rs5 million, fixed capital (excluding land and home value) under Rs20 million, and a workforce of no more than 10 employees.

The industry ministry has also introduced the Enterprise Enhancement Service Operation and Management Work Procedure, 2025, which aims to provide training, guidance, and ecosystem support to new innovators and accelerators in partnership with universities and private-sector bodies. Under this procedure, IEDI will operate services through its centres and collaborate with provincial and local governments.