Millions of dollars of loans dished out

A senior official from the SME Bank of Cambodia said   it has approved around $22 million in loans under the SME Co-Financing Scheme for 175 clients as of Tuesday.

Tan Dexter, chief executive officer of SME Bank of Cambodia, said 20 participating financial institutions (PFIs) submitted application for drawdowns by then. He said that in terms of loan disbursements, 168 applications totalling $19.75 million were made and another seven applications totalling $1.69 million are pending disbursement.

“Based on the average loan size, the number of accounts required to achieve the remaining target of $78.56 million is about 641 clients,” he said. “We are optimistic and confident that we will achieve 50 percent of the total loans in September 2020,” he added.

The capital of the SME Co-Financing Scheme (SCFS), amounts to $100 million and is jointly funded by the SME Bank of Cambodia and participating commercial banks and microfinance institutions (MFIs). There are currently 33 PFIs, 24 commercial banks, six specialised banks, and three MFIs.

Dexter said that the average loan is $122,514, the minimum loan is $16,800 and the maximum is $300,000. He said that SME Bank loans cover all small and medium enterprises (SMEs) except those in agriculture.

“We made some amendments in terms and conditions requested by PFIs and customers. The four key points are that the loan payment is now up to seven years, the repayment can be made monthly, quarterly, half-yearly or there can even be a break from two to six months, allowing restructuring and refinancing and broadening of the sector coverage,” said Dexter.

Secretary of State of the Ministry of Economy and Finance  Ros Seilava said
the financing to SMEs is an important measure responding to the impact of COVID-19 and for growth after the virus is eradicated.

“We first prepared special loans of $50 million for the agriculture sector through the Agriculture Rural Development Bank (ARDB), but now we have injected $50 million into the SME Bank’s Co-Financing Scheme ($50 million from the SME Bank of Cambodia and $50 million from 33 PFIs),” Seilava added.

He said the government has reserved another $500 million to support the SME sector. The government will provide $200 as credit guarantee schemes (CGSs), and another $300 million to assist SME loans and the government’s special loan to the ARDB.

Seilava added that credit guarantee schemes will support SMEs who do not have collateral to get a loan. “Our credit guarantee schemes will be ready in October or November this year,” he added.

“Based on the credit guarantee schemes, the government will issue the loans to the SME Co-financing scheme and the participating institutions to sustain the economy and stabilise life during the crisis and prepare to recover and grow,” Seilava said.

Kao Thach, director general of the ARDB, said it is responsible for loans to SMEs to process agriculture products, but the SME Bank of Cambodia will work on non-agriculture SMEs.

He said that because of COVID-19, the government gave special funds to ARDB to give loans to business people. He added that in February 2020, ARDB received $50 million from the government to give loans to SME owners in the field of agriculture, livestock raising, animal farm, aquafarms, groups of vegetable producers and SMEs that are processing  agriculture products and exports.

“So far ARDB has provided loans of $10 million to 100 applicants. There are still 450 applicants seeking $45 million in total that have not yet been approved. We will continue working on assessing all loans until the end of 2020,” Thach said.

He added that the SMEs are not in one place, therefore, we should cluster them. Producers and processors must also be clustered so that they can have an incentive to register and gain other
advantages.

Seilava, however, added that in the post-COVID-19 era, the government will focus on local and regional economies. Therefore, SMEs will play important roles to boost these economies.

On July 14, the MEF approved the following measures aimed at supporting small and medium enterprises (SMEs) for the immediate, short and medium term. For immediate measures, it will reduce red tape for SMEs and promote financial support to SMEs through the SME Bank and Rural Development Bank.

For measures in the short and medium term there will be a focus on regulatory framework reforms and implementation, business services, financial support, SME marketing, human resources, research and the development and promotion of an entrepreneurial mindset.

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