BB issues circular: Entrepreneurs to get startup loans at 4% interest

In a major boost for young entrepreneurs and innovative business ideas, Bangladesh Bank has introduced a new policy allowing citizens aged 21 and above to access startup loans from commercial banks and financial institutions at a maximum interest rate of 4%.

On Wednesday (July 9), the SME and Special Programs Department of Bangladesh Bank issued a ‘Master Circular on Startup Financing’ outlining the eligibility criteria, policies, funding sources, and responsibilities of banks in implementing this new initiative.

According to the circular, entrepreneurs will be eligible to receive term or working capital loans at an interest rate of up to 4%, applicable on a quarterly basis. This facility applies to both existing and new startups.

However, for existing startups, the benefit is available for up to 12 years from the date of registration.

To encourage loans and investment in startups, Bangladesh Bank has created a refinancing fund of BDT 500 crore. Commercial banks and financial institutions can borrow from this fund to provide loans to entrepreneurs.

The maximum loan limit for startups has been raised from BDT 1 crore to between BDT 2 crore and BDT 8 crore under the new circular.

Additionally, the scope has been expanded beyond loans to include equity investments in startups. Each scheduled bank will be allowed to invest from its own "startup fund."

To facilitate this, Bangladesh Bank plans to establish a venture capital company in which banks can invest their startup funds as equity. The SME and Special Programs Department of Bangladesh Bank will oversee the administrative operations of this new venture capital entity.

According to the circular, banks and financial institutions are also required to offer loans and investments in startups from their own funds. However, moving forward, banks will not be permitted to approve new loans from their internal startup funds—only disbursements for already-approved loans may continue.

Bangladesh Bank emphasized that in the current economic context, startups play a critical role in promoting growth, employment, and innovation. These timely policy reforms aim to accelerate high-potential ventures and make the startup ecosystem more dynamic.

The central bank hopes this initiative will further strengthen the country’s entrepreneur-friendly environment and significantly contribute to achieving the Sustainable Development Goals (SDGs).