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SME Foundation Aims To Lend Tk. 400cr to Small Businesses

SME Foundation Aims To Lend Tk. 400cr to Small Businesses
Photo Courtesy: Business Inspection

SME Foundation will provide another Tk. 400 crores in loans to entrepreneurs of small and medium enterprises (SMEs), especially women, to overcome pandemic losses, accelerate economic recovery, and improve the quality of life in rural communities. An entrepreneur can get a minimum of Tk. 1 lakh to a maximum of Tk. 30 lakh at 4% interest rate, repayable in a maximum of three years or 30 monthly installments, including a grace period of 6 months. The foundation already provided Tk. 300 crore in loans to 3,108 micro and SMEs under the government’s stimulus packages centering on the pandemic. So, the article contains SME Foundation Aims To Lend Tk. 400cr to Small Businesses.

The new loans will be sourced from a “revolving fund” comprising loan repayments of the Tk 300 crore fund alongside the foundation’s own funds, as the Finance Division advised. He said a management policy has also been prepared, and SME Foundation was scheduled to sign an agreement with 17 banks and financial institutions at a hotel in the capital.

Mafizur Rahman, Managing Director of SME Foundation, said that the interest rate was the same as before, and it would have been better if more funds could be gathered. The management policy focuses on value chains, women, new, physically disabled, and third gender entrepreneurs; rural areas and those inhabited by indigenous people, and encouraging partner banks and financial institutions to disburse collateral-free loans.

It also delineates that 25% of the total loan should be disbursed among women entrepreneurs while 30% should be of Tk. 10 lakh or less. Grocery stores, pharmacies, hardware vendors, and environmental polluters such as brick fields and tobacco product sellers are ineligible. The government has, to date, allocated Tk 40,000 crore in two phases of equal amounts in a dedicated stimulus package for the disbursement of loans among cottage, micro, and SMEs.

Bangladesh Bank unveiled the first round worth Tk 20,000 crore in April 2020. Of the sum, 77% was disbursed. Its tenure expired in June 2021. The BB allocated another Tk 20,000 crore for the last fiscal year. According to data from the central bank, only 39% of it was disbursed between July 1 and March 10. The government had allocated Tk 300 crore from the stimulus fund in favor of the SME Foundation.

Cottage, micro, and SMEs account for nearly a fourth of Bangladesh’s gross domestic product. There are about 10 lakh small-and-medium scale industries and 68 lakh cottage industries in the country, of which women are running 7.21 percent. At least 80 percent of these firms were affected by the pandemic, according to Md Ali Zaman, president of the SME Owners Association of Bangladesh. 

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