Loan tenures to be extended to 7 years

              A Canadia Bank staff member serves a customer.  KT/Pann Rachana

The first drawdown under the SME Co-Financing Scheme (SCFS) will be made on June 1, according to a senior official of the State-owned SME Bank of Cambodia.

Tan Dexter, chief executive officer of SME Bank of Cambodia, told Khmer Times the bank has been informed by a number of PFIs last week that they will be submitting requests for SCFS drawdowns soon under the SCFS arrangement the fund allocated is $100 million.

“Of course, Canadia Bank Plc submitted a loan request. The drawdown will be made on June 1 as laid down under the SCFS arrangement,” Tan said.

“We are pleased to say the Ministry of Economy and Finance has approved to extend the loan tenure to seven years from four years under a revised agreement between SME Bank and PFIs. Under the SCFS arrangement, the credit approval is directly under the prerogative of the PFIs,” said Tan.

Canadia Bank, one of the participating financial institutions of the SME Co-Financing Scheme of the SME Bank of Cambodia, said that it has approved the first applicant for the scheme and the loan will be disbursed this week.

Its CEO Raymond Sia told Khmer Times: “I am proud and pleased to say that Canadia Bank… is actually the first bank among the 33 PFIs in the SME Co-Financing Scheme to be approved and am looking to disbursing the loan soon. We are the first bank to disburse the loan. We have the pipeline of the customer base and we are working together with the SME Bank of Cambodia for the disbursement,” he said.

“The customers did not apply using the SME Co-Financing Scheme to our bank, but we saw that there was an opportunity for them to use us that so we encouraged them to look at the SME Co-Financing Scheme and they accepted it,” said Raymond.

“It is the first application, but we actually have a pipeline of applications close to 10 that have been requested which we have not yet approved,” Raymond added. We are the largest PFI for this financing.

“We cannot disclose the loan amount publicly, but it is… between $50,000 to $500,000. That is how we classify the SMEs [small and medium enterprises],” Raymond added.

Raymond believes there is a demand for loans during the current economically difficult situation. However, customers are a lot more conservative at this point in time and they are a lot more risk-averse, so the bank needs to assess new investments. The customers are also reviewing what they want to invest in,” said Raymond.

“At this point in time, generally speaking, I think a little more caution is needed, but I believe this period, this phase, will pass and things will return to normal. I believe in every crisis and in every difficult situation, there always opportunities to be had. It depends on which industry you [business people] are looking at,” he said.

The President of the Federation of Associations of Small and Medium Enterprises of Cambodia (FASMEC) Te Taingpor told Khmer Times that he is working closely with the SMEs daily and meets about 10 to 20 SME owners every day to brief them on the SME loan and application form.

The government’s SME Co-Financing Scheme aims to provide low-interest loans to bolster and develop local SMEs in sectors such as manufacturing and handicrafts to boost local production and fulfill domestic consumption.

It has already raised $97.5 million from 33 PFIs – in addition to the $50 million grant from the government. Under the current agreement the government-funded scheme provides half of the approved loan amounts with each individual financial institution providing the other half.

SMEs can borrow up to $200,000 for working capital and up to $300,000 for investment capital with a maximum interest rate of 7 percent per annum, a repayment period of seven years and collateral dependent on the criteria of individual PFIs. Source from Khmertimes.