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SME bank relaxes loan criteria

SME bank relaxes loan criteria

FRIDAY, June 19, 2015
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The Small and Medium Industrial Development Bank (SMIDB) has relaxed its lending rules and procedures to small and medium-sized enterprises (SMEs), according to a source at the Industry Ministry.

Formerly, to be eligible to the loans, SMEs were required to submit tax receipts in the past three years. How, the requirement is reduced to one year.

Eligible SMEs were required to present the document confirming their rights over the land on which their businesses are located. Before the minimum tenure was set at five years. It will now be cut to four years.

“We have earmarked to lend Ks20 billion (US$20 million) this fiscal year and so far, some Ks8 billion in loans has been extended. The loans will be offered to the SMEs when they can present a property grant, registration card, tax receipts and other documents,” said the official who asked not to be named.

The SME loan scheme prioritises Yangon, Mandalay and Sagaing regions and Shan State and has allocated Ks2 billion in loans for each area, compared to Ks1 billion each for other states and regions.

The rule relaxation followed slow loan extension by the bank in the previous fiscal year.

Setting to boost the capacity of SMEs, the government targeted to loan Ks20 billion in the 2014-15 fiscal year, which ended on March 31. However, total extension was below Ks7 billion.

In the fiscal year, 237 SMEs won loans from the bank. The numbers were high compared to the previous years. In the 2013-2014 fiscal year, fewer than 100 obtained financial assistance from the government.  The government loan scheme for SMEs started in October 2012, when only 25 entrepreneurs were entitled to Ks5 billion worth of loans.