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Government Funds: Loan Support for Entrepreneurs in Nepal (FY 2075/76)

For each Fiscal Year (FY), the Government of Nepal (GoN) sets sectoral priorities in its federal budget. The current government policies are focused towards the promotion of entrepreneurship as it is an important aspect for the sustainable development of a country. Taking this into account, budget has been segregated for subsidizing business loans in order to encourage entrepreneurship, create employment and increase domestic production in Nepal.

For the FY 2075/76 (2018/19), the government, in line with the Integrated Working Procedure for Subsidised Credit 2018, has announced plans to provide interest subsidy on loans for various programmes, including youth self-employment, women entrepreneurship, self-employment for returnee migrants, upliftment of underprivileged community and agriculture and livestock promotion.

Any Nepali citizen above 18 years of age having Personal Account Number (PAN) and not listed as a ‘defaulter’ in any Bank and Financial Institutions (BFIs) can apply for the loan facility, according to the procedures published by the Ministry of Finance (MoF). The term of the loan facility is up to five years and is available at all types of BFIs – commercial banks, development banks, finance companies and micro-finance institutions. The actual size of the loan and instalment is decided by the respective BFIs.

Educated Youth Self-Employment Loan

In order to encourage youths with higher education to start their own businesses, Educated Youth Self-Employment Loan allows youths below 40 years to obtain loan against collateral of their academic certificates.

  • Loan Size: up to NPR 0.7 million
  • Interest Subsidy: 5% interest subsidy
  • Priority Areas: The loan can be taken for agriculture, poultry, irrigation, agricultural tools and machines, forest development and promotion of grazing land as well as land development and conservation
  • Special Considerations: The criteria to receive this loan entails the person to hold a university degree, obtained at least 7-day training provided by the government institutions like the Council for Technical Education and Vocational Training (CTEVT) and Cottage and Small Enterprise Office/Committee, Skill Development Training Centre and submission of a brief proposal of the enterprise including how the subsidized loan will be utilized.


BFIs extending the concessional loan facility to the youth cannot charge more than an additional 2% interest to the grant provided by the government, and they are not allowed to charge other fees except the interest on the loan.

Women Entrepreneurship Loan

This loan scheme was initiated with the motive to fulfill the financial requirements of women in order to encourage them to start a business venture. It allows women to take loan against group guarantee.

  • Loan Size: up to NPR 1.5 million
  • Interest Subsidy: 6% interest subsidy
  • Priority Areas: Not specified
  • Special Considerations: To obtain the loan, a brief proposal for enterprise operation should be submitted. Where loan is provided to a group, the group should consist of a minimum of 5 members belonging to different families.

Youth Returned from Foreign Employment Project Loan

This loan was introduced by the government to retain migrant returnees so that they can utilize the skills and experience they have gained abroad. This initiative has received an encouraging response with more and more workers applying for the financial assistance introduced to engage them in occupations within the country. Within a month, nearly 3,000 youths who are experienced in foreign jobs applied for this loan since the launch of the scheme.

  • Loan Size: up to NPR 1 million
  • Interest Subsidy: 5% interest subsidy
  • Priority Areas: Not specified
  • Special Considerations: Migrant workers who have returned to the country within the past three years after staying abroad for at least six months can apply for the loan based on certification of their skills so that they can start a relevant business. For this, a detailed business plan should be submitted that clearly mentions how the enterprise would operate, the number of people to be involved in the business, and how the business would utilize their own skills

Commercial Agriculture and Livestock Loan

This scheme was introduced by the government to address the problem of rising unemployment and manpower exodus from the country by encouraging youths to take up farming, as well as make the country self-sufficient in food production.
This loan can be provided against collateral of the same land used for agro or livestock undertaking or crops. For credit up to NPR 1 million, loans can be issued based on group guarantee.

  • Loan Size: up to NPR 70 million
  • Interest Subsidy: 5% interest subsidy
  • Priority Areas: The scheme applies to loans used to produce, process, store and distribute vegetables, fruits, seeds, fish, herbs, mushrooms, dairy items, ostriches, turkeys, ducks, sugarcane, coffee, tea, cardamom, ginger, turmeric, jaitun, sunflower, allo, lokta, barley, buckwheat, and silam seeds. Interest subsidy will also cover loans extended to floriculture and beekeeping businesses, livestock and poultry, slaughterhouses as well as businesses related to storage, processing and distribution of meat items.
  • Special Considerations: Individuals seeking commercial agriculture and livestock loan should submit a brief proposal of enterprise operation and utilisation of the loan facility. If the project is above NPR 1 million a Detailed Project Report (DPR) of the enterprise should be submitted to the bank.


BFIs are not allowed to add more than 5% interest on top of the interest subsidy while fixing the interest rate i.e. maximum 10% total interest rate. Loans exceeding NPR 50 million should be approved by a seven-member Central Coordination and Monitoring Committee formed under Nepal Rastra Bank’s (NRB’s) deputy governor who overlooks the banking sector.

Dalit Community Enterprise Development Loan

This loan scheme was initiated to meet the financial requirements of the youth under Dalit Community to start business for modernizing and promoting the traditional skill and occupation of the Dalit Community. The loan can be obtained under collective guarantee.

  • Loan Size: up to NPR 1 million
  • Interest Subsidy: 5% interest subsidy
  • Priority Areas: Not specified
  • Special Considerations: The recipient of the loan should belong to the Dalit Community and provide a recommendation from Rural Municipality (Gaunpalika) or Municipality (Nagarpalika) regarding their proof of belonging to the Dalit Caste. Additionally, a brief proposal for enterprise operation should also be submitted to the BFI. In case, where loan is secured to a group, the group should have a minimum of 5 members, each belonging to a Dalit Caste from different Dalit families.

The information in this blog is obtained from various sources including government budget speech (FY 2075/76) and newspaper articles by the author. The loan procedure may vary according to each bank. Respective bank liaison officer should be consulted for more details.

If required, Biruwa Advisors provides support in preparing business plan and conducting financial analysis. Click the link to visit our service pages.


Yuka Shrestha