SME loans on the rise
SME loans on the rise
The Lao Development Bank has issued loans of about 9.3 billion kip to small and medium enterprises (SMEs) since a dedicated fund to encourage lending to such businesses was officially launched in August last year.
A bank official said on Thu rsday that the 35 loans they have granted were given mainly for businesses involved in raising pigs and poultry, trades and service operations and to landlords who let out budget apartments and row rooms.
“Most of the loans are for their revolving capital and will last for one to three years,” the bank official said on Thursday.
“Currently we are considering granting loans to eight more people who have already submitted proposals to the bank requesting a line of credit,” the bank official said.
“The matters to be taken into consideration include studying each agricultural and cattle breeding project to see if it meets the right criteria or not,” the official said.
Since A ugust 2012 SMEs can obtain loans from the government's SME Fund through the Lao Development Bank.
The SME Fund provided initial funding of 14 billion kip to the bank for a five-year period at an interest rate of 5 percent per year, and “so far we have issued SME loans to an equivalent of about half the fund the official said.”
From the beginning until the end of January this year the bank had only issued SME loans totalling about 500 million kip.
It expects to release loans to a total of about 70 businesses, drawing from the 14 billion kip fund. The fund has mainly focused on supporting SMEs in the agricultural processing, handicrafts and tourism sectors.
Small enterprises can get loans of up to 250 million kip while medium d enterprises can obtain loans of up to 500 million kip.
The bank will provide loans to SMEs at an interest rate of 9 percent per annum for a loan of one year or less or a rate of 10 percent per year for loans of between one and three years duration.
It hopes the number of businesses applying for loans from their service offices will steadily increase, aiming to allow SMEs around the country to have the same access to credit facilities.
“Currently the loans are being granted mainly to SMEs in Vientiane but we hope to extend this to the provinces soon,” the official said. “However we first have to see if the grant is effective in Vientiane.”
The official said recently some financial organisations have visited the bank showing an interest in the SME Fund and suggesting they may support it in the future.
These include the World Bank, the Japan International Cooperation Agency, and Deutsche Gesellschaft für Internationale Zusammenarbeit or the German Society for International Cooperation.
vientiane times
