IT Startups Surge to Front Line of Nepal’s Government Loan Applications

The Nepalese startup landscape just witnessed a monumental shift. Information technology companies have claimed the spotlight in the government’s subsidised loan program, marking a dramatic change from previous years when agriculture dominated applications. This transformation reveals how Nepal’s entrepreneurial ecosystem is evolving rapidly in response to technological opportunities.

Record-Breaking Application Numbers Signal Growing Entrepreneurial Appetite

Government officials announced that the Industrial Enterprise Development Institute (IEDI) received 10,244 applications for subsidised start-up loans by the final deadline of November 26. The sheer volume demonstrates unprecedented interest in entrepreneurship among young Nepalis.

What makes this year truly remarkable is the demographic shift. 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, according to Umesh Kumar Gupta, executive director of IEDI. This represents a fundamental change in how aspiring entrepreneurs view business opportunities.

The digital application process proved highly popular. The call for proposals was issued on November 5, and 8,203 of the applications were submitted online. Young entrepreneurs clearly embraced technology for both their business ideas and application processes.

Understanding Nepal IT Startup Loan Program Structure

The current Nepal IT startup loan program offers significant support for emerging technology companies. Despite rising demand, the government this year reduced the maximum loan amount to Rs2 million, down from Rs2.5 million. However, the attractive 3% annual interest rate remains unchanged.

Qualifying for a Nepal IT startup loan requires meeting specific criteria. 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 government allocated substantial funding for this initiative. NPR 73 crore (730 million) has been set aside to support hundreds of startup businesses this year. However, this amount falls short of IEDI’s request for Rs1 billion, creating competitive pressure among applicants.

Budget Constraints Create Challenges Despite Growing Demand

Funding limitations pose significant concerns for Nepal’s startup ecosystem. IEDI had requested Rs1 billion for the programme but received only Rs730 million, which officials say is insufficient given the growing number of applicants. This shortfall highlights the gap between entrepreneurial enthusiasm and available government resources.

Industry experts warn about potential long-term consequences. Experts warn that cutting the subsidised loan budget risks discouraging innovation at a time when banks have adequate liquidity and interest rates remain low. The timing seems particularly unfortunate given favorable market conditions.

Niraj Khanal from the Startup and Innovation Forum offers constructive suggestions. 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”.

Why IT Startups Lead the Nepal Government Loan Applications

Several factors explain why information technology companies dominate this year’s applications. Nepal’s digital transformation has accelerated significantly since 2020. Nepal’s tech ecosystem has transformed rapidly, with internet penetration soaring from 0.9% in 2005 to 65.9% in 2021, fueling innovation across fintech, e-commerce, logistics, and edtech.

Young entrepreneurs recognize technology’s scalability potential. Unlike traditional agriculture ventures, mobile applications and software solutions can serve customers beyond Nepal’s borders. This international reach makes IT startups particularly attractive for ambitious entrepreneurs seeking rapid growth.

The COVID-19 pandemic also accelerated digital adoption among Nepali consumers. Businesses discovered the necessity of online presence, creating demand for local technology solutions. Smart entrepreneurs identified these gaps and developed applications tailored to Nepali market needs.

Eligible Sectors for Subsidised Loans Extend Beyond Technology

While IT startups dominate applications, the program supports diverse sectors. Alongside agriculture, tourism, and information technology, energy-related startups also submitted a high number of proposals. This diversity reflects Nepal’s multi-faceted economic opportunities.

The comprehensive sector list includes traditional and modern industries. 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.

This broad eligibility ensures that various entrepreneurial talents can access government support. However, IT startups’ dominance suggests these entrepreneurs are more aware of funding opportunities or better prepared for application processes.

Application Process and Timeline for Nepal IT Startup Loan

The selection process follows established procedures designed to identify promising ventures. 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.

Entrepreneurs can apply through multiple channels for funding for tech startups in Nepal. Online Submission: Visit the official IEDI website: Visit in Person: Visit the Industrial Enterprise Development Institute (IEDI) office, Tripureshwor, Kathmandu. The online option clearly appeals to tech-savvy entrepreneurs.

Previous years show successful disbursement patterns. IEDI recommended 183 startup enterprises for subsidised loans in the last fiscal year. However, 165 received a loan of Rs190.40 million. This demonstrates the program’s track record of actual fund distribution.

Government Initiatives Supporting Tech Entrepreneurship

Nepal’s government has implemented several initiatives to support technology entrepreneurship beyond direct funding. 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.

These comprehensive support systems address common startup challenges. Training programs help entrepreneurs develop business skills. Guidance services assist with regulatory compliance. Ecosystem support connects startups with mentors, customers, and partners.

The collaborative approach involves multiple stakeholders. Universities contribute research capabilities and talent pipelines. Private sector partners offer market insights and commercial opportunities. Provincial and local governments provide regional support and market access.

Success Stories Inspiring New IT Entrepreneurs

Nepal’s technology sector has produced notable success stories that inspire aspiring entrepreneurs. Let’s kick things off with Khalti, the digi-wallet sensation that’s made paying for stuff online a total breeze. Launched in 2017, they’ve already racked up over 4 million users and handled transactions worth a billion bucks annually. Such achievements demonstrate the potential for homegrown technology companies.

Investment activity has increased significantly in recent years. According to a recent report by the UNICEF Innovation Fund, Nepal’s tech ecosystem has attracted over $40 million in investments since 2020. That’s some serious cash flow, fueling rapid growth and innovation. This external validation encourages local entrepreneurs to pursue technology ventures.

Industry leaders express optimism about Nepal’s potential. As Biruwa Ventures’ founder, Patricia Gonzalez, puts it, “Nepal’s tech scene is thriving, driven by a talented pool of entrepreneurs and a supportive ecosystem.” Sounds like the future is bright for Nepal’s tech revolution!

Comparing Agricultural vs Technology Startup Applications

The dramatic shift from agriculture to technology applications reflects changing economic perspectives among young Nepalis. Traditional sectors like farming require significant physical infrastructure, land access, and weather-dependent operations. Technology startups, by contrast, need primarily intellectual capital and minimal physical resources.

Cost structures differ substantially between sectors. Agricultural ventures typically require equipment, land leases, irrigation systems, and storage facilities. IT startups mainly need computers, internet connections, and software licenses. This lower barrier to entry attracts young entrepreneurs with limited capital.

Market reach potential also influences sector choice. Agricultural products serve primarily local or regional markets due to transportation and preservation challenges. Software applications and digital services can serve global markets from day one, offering unlimited scalability potential.

Regional Development and Startup Hubs

Nepal’s startup ecosystem extends beyond Kathmandu valley, though the capital remains the primary hub. By 2025, Nepal has over 500 registered startups, with key hubs in Kathmandu, Lalitpur, Pokhara, and Chitwan, and sectors ranging from fintech to tourism services. This geographic distribution helps spread entrepreneurial opportunities across the country.

Different cities develop unique specializations based on local advantages. Kathmandu focuses on fintech and software development due to proximity to financial institutions and government agencies. Pokhara emphasizes tourism technology given its position as a major tourist destination. Chitwan develops agritech solutions leveraging its agricultural base.

Government support reaches beyond central regions. Provincial and local governments increasingly recognize startups’ economic development potential. They offer additional incentives, simplified regulations, and promotional support to attract entrepreneurs to their regions.

Future Outlook for Nepal IT Startup Ecosystem

The overwhelming interest in Nepal IT startup loan programs signals a promising future for the country’s technology sector. Young entrepreneurs increasingly view technology as the pathway to economic success and social impact. This mindset shift could accelerate Nepal’s transformation into a technology-driven economy.

However, sustainability requires addressing current challenges. Funding constraints must be resolved to meet growing demand. Educational institutions should expand technology and entrepreneurship programs. Infrastructure development needs to support digital businesses across all regions.

International partnerships offer significant growth opportunities. Increasing digitalization, government support, and international investor interest are driving ecosystem development. Global investors recognize Nepal’s potential and seek local partners for market entry.

Success depends on maintaining momentum while building sustainable foundations. The government should increase funding for startup programs. Educational institutions must enhance technology and business curricula. The private sector should expand mentorship and investment activities.

The surge in IT startup applications for subsidised government loans represents more than just a statistical trend. It reflects Nepal’s youth embracing technology as a tool for economic advancement and social change. With proper support and strategic development, these aspiring entrepreneurs could transform Nepal into a regional technology hub, creating jobs, generating exports, and building a more prosperous future for all Nepalis.

This technological awakening, demonstrated through record-breaking loan applications, positions Nepal at an inflection point. The next few years will determine whether this enthusiasm translates into sustainable economic transformation or remains merely an ambitious dream. Early indicators suggest the former, making this an exciting time to watch Nepal’s entrepreneurial journey unfold.

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