Accessiblity of financial service for startup and growth company : in context of Nepalese SMEs

For the attainment of goal of startup and emerging growth company through innovation and market expansion requires huge capital. Those needs for huge capital cannot be met by company internal source therefore they should find appropriate financial sources. Availability of such sources depends upon the development of the financial system. Despite the increase in number of financial institution due to liberalization of the government policies in financial sector, access to finance for startup and emerging growth company is still limited in Nepal. Ten years’ internal war and devastating earthquake faced by Nepal drag economic development behind, however, banking & financial institutions as well as other financing sources has grown significantly. However, the service of BFIs and other sources has unable to reach the productive sector for economic prosperity. This study focused on finding out the commonly used financing source and barriers for having access to such source for startups and growth companies in terms of Nepalese context. During the study, the trend of using personal and friends & family sources to accumulate fund by startups and BFIs by growing companies in Nepal were commonly found. Often personal and friends & family source is unable to generate enough capital to meet all the funding need at different phases of business, most of SMEs in Nepal face difficulties to survive. BFIs are major external player to finance the business in the Nepalese scenario, however, most of startups do not fit in the lending approaches of bank. High interest rates and complex process associated with BFIs often demotivates the entrepreneur to use such sources at the fullest. SBA of Nepal was hardly seen as dealing with the financial issues of startups and growth companies as they do in developed economies. To deal with the BA and VCs requires high business skills and competences; lack of such skill within most Nepalese SMEs was found as a barrier to utilize such financing sources. Revision and amendment in government and BFIs polices and need of effective mechanism was figured out to ensure that startup and growing companies do not die due to limited financial accessibility