SME Bank and ARDB disburse $63M in loans

State-owned financial institutions Small and Medium Enterprise Bank of Cambodia (SME Bank) and Agricultural and Rural Development Bank of Cambodia (ARDB) have disbursed $63.44 million in loans to small and medium-sized enterprises (SMEs) as of Tuesday.

SME Bank CEO Dexter Tan Beng Kong told a press conference held at the Council of Ministers on Thursday that microfinance institutions (MFIs) participating in the SME Co-Financing Scheme 2020 (SCFS) had received 175 loan applications for $21.44 million.

SME Bank has approved 168 of the applications for $19.75 million, he said.

He noted that the approved loans came from a diverse range of businesses pning sectors such as food production and processing, consumer goods, tourism goods and waste management, industrial components, information technology (IT) research and development, and IT services sector.

“We believe that the $100 million allotted to this project will be used up by the end of this year,” Tan said.

The $100 million fund behind the project is jointly financed by the SME Bank and 32 other participating financial institutions.

These are 23 commercial banks, two specialised banks, five microfinance deposit-taking institutions (MDIs) and two MFIs.

SMEs can borrow up to $200,000 for working capital and $300,000 for investment capital with a maximum interest rate of seven per cent per annum and a repayment period of seven years.

ARDB director-general Kao Thach told the press conference that ARDB had received 430 loan applications for $42 million as of Tuesday. It has approved more than $11.37 million in loans.

He said: “Most of the loan applications come from pig, fish, chicken, duck and cattle farmers, as well as vegetable and fruit growers, as well as processors of agricultural products. We hope that the fund will be used up by the end of this year.”

The government in May decided to cut the annual interest rates from six to five per cent for working capital and from 6.5 to 5.5 per cent for capital investment, without service charges.

It also adjusted the maximum loan term from five to seven years for capital investment while retaining a short-term maximum of two years for working capital.

Ministry of Economy and Finance undersecretary of state Ros Seilava told a news conference that the economic crisis instigated by Covid-19 had been the primary trigger for the emergency SME lending endeavours.

He said the government has allocated $500 million in loans for SMEs in “a second phase”. Of that, $300 million will be provided for financing support and $200 million will be for credit guarantee projects.

“I hope that this magnitude of funding will help sustain our economy during the health crisis and be ready for recovery when it is over,” Seilava said.

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