Lao Development Bank ready to hand out loans to SMEs
Lao Development Bank ready to hand out loans to SMEs
Small and medium d enterprises (SMEs) in the capital and Borikhamxay and Vientiane provinces can now obtain loans from the government's SME Fund through Lao Development Bank (LDB) service offices.
The bank had to complete the upgrade of its service operations before it was ready to disburse the loans.
“So far, only one large Vientiane farm business operator has applied for a loan, which was 200 million kip,” a bank official said yesterday.
The bank expects SMEs will increasingly apply for loans from their branches. The bank is also aiming for SMEs around the country to have the same access.
“We used the SME loan service in Vientiane as a model, and we hope to continue to roll out the service to all provinces if the model is a success,” the bank official said.
The SME Fund has provided 14 billion kip to the LDB over five years, at an interest rate of 5 percent per year under an agreement signed last month.
The bank expects to release loans to about 70 SMEs, drawing from the 14 billion kip fund.
An SME Fund official, Mr Kingxay Chounlamountry, said the fund has mainly focused on supporting SMEs in the agricultural processing, handicraft production and tourism services sectors.
Small enterprises can receive a loan of up to 250 million kip and medium enterprises can obtain a loan of up to 500 million kip.
The bank will release loans to SMEs at an interest rate of 9 percent per year for a loan of a year or less, and 10 percent per year for loans of more than one to three years.
According to the government's initial SME development plan for 2011 to 2015, the sector needs about 3,700 billion kip in financial support to push growth in the sector to 13 percent per year.
This figure will include about 3,200 billion kip for SMEs' financial backing. The rest will be for technical support and promotional activities.
The SME sector is the basis of the national economy, and the backbone of economic growth. It makes up 99.8 percent of all businesses.
The government approved handing over 16 billion kip to the Fund to encourage banks to loan money to SMEs. Previously, it was difficult for smaller operations to access bank loans, hindering their growth.
vientiane times
