Nearly three months after the deadline for startup loan applications closed, the government remains stuck in the selection process, delaying the much-anticipated concessional financing for young entrepreneurs.

“The applications are under the selection process as the documents submitted are being studied. It has also now been decided to conduct field inspections during the selection phase,” said Maniram Gautam, information officer at the Industrial Enterprise Development Institute (IEDI).

IEDI received 10,244 applications for subsidised startup 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 previous years, field inspections were conducted by banks after applications were shortlisted and recommended for loan approval. This year, however, the institute has changed its approach.

“Based on the experience of the past two years, we decided to conduct inspections of startups before shortlisting them for loans to better understand their actual status,” Gautam said.

The field inspection process is currently under preparation. As IEDI does not have regional offices or sufficient human resources to conduct inspections nationwide, it is coordinating with the Ministry of Industry. Discussions are underway to mobilise Enterprise Development Facilitators deployed at the local level by the ministry to inspect all 10,244 applicants.

The inspection schedule has not yet been finalised, but the institute aims to complete the process within March. “Since we need to coordinate with various government offices and organisations, it is taking time,” Gautam said. He added that the institute plans to conclude inspections within a week of work verifying whether the applying startups meet the criteria outlined in their submitted documents.

After the inspection phase, an assessment committee will evaluate proposals based on set criteria. IEDI will then publish a preliminary list of selected applicants and call them for business presentations.

“We have plans to provide the loans in April. But since the country is going through elections, it might cause obstacles to our timeline,” Gautam said.

Earlier, the institute had aimed to complete loan processing by January. The concessional loans will be issued through the Rastriya Banijya Bank at an annual interest rate of 3 percent.

The subsidised loan programme is seen as a critical support mechanism for Nepal’s nascent startup ecosystem, which continues to struggle with limited access to capital and formal financial services in the early stages of business development.

Last fiscal year, IEDI received 5,120 proposals, of which 600 enterprises received loans from the 661 recommended. In the fiscal year 2023–24, 165 enterprises received loans out of the 183 recommended. Over the past two fiscal years, a total of 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 growing demand, the government has reduced the maximum loan ceiling this year to Rs2 million from Rs2.5 million. IEDI had requested Rs1 billion for the programme but received only Rs730 million, which officials say is insufficient given the surge in applications.

Experts warn that reducing the subsidised loan budget could discourage innovation at a time when commercial banks have adequate liquidity and interest rates remain relatively low.

To qualify, 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.

Borrowers are required to use the funds strictly for the proposed purpose, repay installments on time, provide necessary data during inspections and submit quarterly progress reports.

Banks may recommend action in cases of default, and accounts of non-compliant startups may be suspended. Banks are allowed to charge a service fee up to 0.1 percent of the loan amount.

The subsidised loan scheme for young entrepreneurs was introduced in 2018 by the Oli administration to promote self-employment. However, the working procedure has undergone multiple revisions over the years and continues to evolve.