Startups will get loans of up to 8 crore rupees, funds of 1200 crore rupees

If any of the entrepreneurs default, they or their organization will not be eligible for the loan. Any venture formed by restructuring or demerger of an earlier business shall not be considered as a startup.

After much discussion, the funding path for startup companies in the country has been made easier. For the financing of this sector, a fund of about 1,200 crore taka was formed with Bangladesh Bank and the profits of banks. Now from that fund
Startup companies will get a loan of up to 8 crore rupees at 4 percent interest. Previously, the maximum loan amount was 1 crore.

Apart from this, entrepreneurs above 21 years of age can apply for this loan. There will be no obligation to comply with credit rating system or credit quality system to get this loan. As a result, getting funds will be easier. Bangladesh Bank has issued a policy in this regard yesterday to facilitate financing in the startup sector. Many entrepreneurs of this sector have welcomed this policy.

Entrepreneurs above 21 years of age will get funds at 4 percent interest. Bangladesh Bank made a policy in this regard yesterday.

Two types of funds were formed on March 29, 2021 for the startup sector. The first of these is Bangladesh Bank's Tk 500 crore refinancing fund. The second is the banks' own startup fund consisting of 1 percent of the profits of 52 scheduled banks. Till December 2023, the total size of the fund made from the profit money of Scheduled Bank stands at Tk 505 crore 10 lakh. The total amount of money between the two funds is more than 1000 crore rupees. After that, more than 1000 crore rupees were accumulated in the fund in three years. However, till last year, 35 crore rupees were distributed among the startup companies.

People related to the startup sector say that the country's startup companies are not able to expand their activities due to lack of adequate funding. But despite having a separate fund for this, the entrepreneurs are not able to take sufficient loans. Because there was no suitable policy to get financing. For this, the central bank has given the policy yesterday.

Who are startups and eligible for funding

Startup shall mean a technology-based business or industrial enterprise or domestic-foreign joint venture formed by one or more entrepreneurs, which is promising, expandable and taking an active role in producing a new and innovative product or service. Apart from this, innovation and advancement of new and existing products/services/processes/technology will also be considered as startups. However, any venture formed by restructuring or demerger of an earlier business shall not be considered as a startup.

Startups registered in Bangladesh can avail investment benefits from this fund. Organizations with a tenure of 12 years or less as startups will be considered eligible for financial assistance from the fund. Creative initiatives of any industrial enterprise will not be funded as startups. Startup entrepreneurs must be at least 21 years of age to avail financial assistance from the fund. If any of the entrepreneurs default, they or their organization will not be eligible for the loan. Entrepreneurs nominated or awarded through the startup selection program organized by the country's public-private institutions, universities, national or international organizations will get priority in getting loans.

two funds, how much interest

The policy also provides for equity-facilitation along with loans or investments in favor of startups. For this, it has been said to form a 'startup fund' by giving 1 percent of the net profit of each bank. Only equity or capital investment facilities can be provided to startup enterprises from the 'Startup Fund'. Banks can provide this facility using their own funds. In this case, a total fund of 700 crore rupees will be formed.

The policy also states that bank loans can be disbursed by taking refinancing facilities from the refinancing fund of Tk 500 crore formed by Bangladesh Bank. Without this fund no fresh loans or investments can be disbursed in favor of startup entrepreneurs. However, pre-approved loans or investments can be waived.

Method of financing, what is the limit

Only capital investment facility can be provided from startup fund. Besides, Bangladesh Bank will form a venture capital company to facilitate financing of startups. Banks will deposit their startup funds as investments in these companies. Bangladesh Bank's SME and Special Programs Department will administer the fund.

Bangladesh Bank has also specified who will get how much loan. It has been said that up to 2 crore rupees can be given to enterprises less than two years old. A loan of up to Tk 5 crore can be given to enterprises aged 2 to 6 years and up to Tk 8 crore to enterprises aged 6 to 12 years.

Apart from this, capital investment of up to 2 crore rupees can be provided in the initial stage for potential innovative initiatives and effective and efficient initiatives to meet customer needs. 5 Crore capital can be invested in ventures with proven and established customers and revenue generation at growth stage. Enterprises that are in high growth and expandable stage can be invested up to 8 crore rupees if the product or service gets wide acceptance after taking initial funding. Bangladesh Bank has also specified how the related institutions will operate after taking the capital investment.