SME Bank is considering unsecured loans for SMEs

The state-owned Small and Medium Enterprise Bank of Cambodia Plc (PME Bank) plans to waive collateral requirements for new loans to eligible local small and medium-sized enterprises (SMEs) in the near future, in order to reduce barriers and obstacles that limit their access to the liquidity necessary to finance the development and growth of the company, according to its CEO.

Lim Aun was speaking at the 8th Annual Macroeconomic Conference on “Policy Challenges and Options for SME Development in Cambodia” organized by the National Bank of Cambodia (NBC) on December 22.

He noted that unsecured loans, or those that do not require any form of collateral, are quite rare in the Cambodian market, and “most banks” simply do not offer them.

An SME Bank board recommended carrying out a feasibility study on unsecured loans, he said.

He stressed that a working group was taking preliminary steps and that the public lender would “study all the conditions” that would allow it to provide unsecured loans to SMEs “as soon as possible”.

He also pointed out that the government recently created the Credit Guarantee Corporation of Cambodia Plc (CGCC) to support SMEs that have difficulty obtaining loans due to a lack of adequate collateral.

Lor Sathya, deputy director general of the General Department of Small and Medium Enterprises and Crafts of the Ministry of Industry, Science, Technology and Innovation, pointed out that the Covid-19 crisis has hit hard affected SMEs, especially those in tourism and manufacturing.

“Improving the quality of products in the market is an essential objective on which SMEs themselves must focus carefully, and strengthen human resources and other capacities, seek and seek additional information, to develop their activities”, did he declare.

NBC Deputy Governor Chea Serey pointed out that Cambodian SMEs juggle a multitude of challenges in running their businesses, which constitute major obstacles to sustainable development.

“These challenges include a lack of management skills and a skilled workforce, a lack of capital and access to official financing, a lack of market-related information at national and international levels, competition from large companies. and imports of goods, ”she said.

Since most of the SMEs hardest hit by the Covid-induced economic downturn were in the informal sector, managing data to formulate policies that optimally support SME development has been a grueling task for the government. , she shared.

“The Covid-19 crisis has accelerated changes in the economic structure and modes of communication, including the increasingly widespread use of technology in production and commerce, which is forcing SMEs to strengthen their technological capacities to respond to the new situation, ”Serey said.

In October, the Ministry of Industry launched the KhmerSME website to provide micro, small and medium-sized enterprises (MSMEs) with access to comprehensive business information, as well as ASEAN and global markets.

This covers a wide range of topics such as laws and regulations; technical training; transfer of science, technology and innovation; access to finance and markets; start a business; and incentives and mechanisms to cultivate more strategic, environmentally sound and inclusive business practices, increase efficiency and create competitive advantage.

The Ministry of Economy and Finance recently announced that the government has set aside $ 250 million for direct loans from the SME Bank and the Cambodia Agricultural and Rural Development Bank (ARDB) next year, in order to support SMEs.