SME Foundation to Provide Tk 400cr to Small Businesses

SME Foundation to Provide Tk 400cr to Small Businesses

The SME Foundation would provide a further Tk 400 crore to entrepreneurs of small and medium-sized firms (SMEs), particularly women, to help them recover from the epidemic, speed economic recovery, and improve the quality of life in rural regions. A business owner would be able to obtain a loan for a minimum of Tk 1 lakh and a maximum of Tk 30 lakh at 4% interest, repayable over a maximum of three years or in 30 monthly installments, with a grace period of 6 months. As part of the government’s stimulus plans centered on the pandemic, the foundation has already given 3,108 micro and SME loans totaling Tk 300 crore. In accordance with the advice of the Finance Division, the new loans will be drawn from a revolving fund containing loan repayments of the Tk 300 crore fund and the foundation’s own funds. According to him, a management policy has already been prepared, and the SME Foundation is set to sign a contract with 17 banks and other financial institutions this evening at a hotel in the capital.

According to The managing director of SME Foundation, Mr. Mahfuzur Rahman, there have been no changes made to the interest rate, and it would be great if more funding could be gathered. The foundation has set focuses on women, newcomers, physically challenged, and third gender entrepreneurs from rural and underdeveloped areas and will encourage partner banks and financial institutions to provide collateral-free loans. The SME Foundation is also determined to provide a minimum of 25% of this amount to women entrepreneurs. However, there are some small businesses that aren’t under the shade of this loan project, like – grocery stores, pharmacies, hardware stores, and environmental polluters like brick fields and tobacco products. 

As part of a targeted stimulus package, the government has so far set up Tk 40,000 crore in two equal installments for the loan disbursement among cottage, micro, and SMEs. In April 2020, Bangladesh Bank launched the initial round, which is valued at Tk 20,000 crore. 77% of the total was distributed. Its term ended in June of the previous year. Another Tk 20,000 crore was allotted by the BB for the previous fiscal year. According to central bank date, from July 1 to March 10, only 39% of it has been paid out. The government gave the SME Foundation 300 crore Tk from the stimulus fund.

Md. Ali Zaman, president of the SME Owners Association of Bangladesh, estimates that at least 80% of these businesses were impacted by the epidemic. Nearly one-fourth of Bangladesh’s GDP comes from the cottage, micro, and SMEs. In the country, there are 68 lakh cottage industries and roughly 10 lakh small- and medium-sized businesses, 7.21% of which are owned by women. 

Leave a Comment