The SME Foundation and Bangladesh Small and Cottage Industries Corporation (BSCIC) have successfully disbursed Tk150 crore in low interest loans to 2,460 small and medium enterprises to help them overcome Covid-induced impacts.
Of the amount, the foundation disbursed Tk100 crore among 1,044 entrepreneurs from different clusters, especially in rural areas. Of the loan recipients, at least 25%-30% are women.
The BSCIC disbursed Tk50 crore among 1,416 entrepreneurs, and 72% of them are from Rajshahi, Khulna and Chittagong divisions.
On 17 January, the government approved a special stimulus package to provide financial support to marginal entrepreneurs through the SME foundation, BSCIC and selected non-governmental organisations, so that the sector can stay afloat amid this unprecedented crisis.
Under the new package, the government earmarked Tk1,500 crore for small traders, entrepreneurs and farmers. Loans disbursed under the initiative are repayable at a 4% interest rate in two years.
The finance ministry had authorised the SME Foundation to disburse Tk300 crore under the package, while BSCIC to disburse Tk100 crore. But for fiscal year 2020-21, the foundation and BSCIC received Tk100 crore and Tk50 crore.
These institutions managed to fully disburse the amount allotted for FY21 by 30 June, insiders said, adding that the SME sector was one of the industries hit hardest by the pandemic.
Therefore, the demand for stimulus loans is very high.
The BSCIC disbursed the stimulus package through its 64 districts offices, while the SME Foundation utilised ten banks and two non-bank financial institutions to carry out the process as per the package implementation agreement.
The government will hand over the rest of the fund to the SME Foundation and BSCIC in FY 2021-22.
'Demand high for stimulus loans'
The government had announced a Tk20,000 crore stimulus for SMEs last year after the Covid-19 pandemic struck Bangladesh. But there were allegations that most small entrepreneurs did not get loans due to the complicated disbursement process.
Under the circumstances, the government took the initiative to involve the SME Foundation, BSCIC and selected NGOs in disbursing loans at the grassroots level.
The government tasked the Social Development Foundation, Rural Poverty Alleviation Foundation, Bangladesh Rural Development Board, Small Farmers Development Foundation, Joyeeta Foundation and Bangladesh NGO Foundation with implementing the stimulus package.
SME Foundation's General Manager Nazim Hasan Sattar said, "The demand for stimulus loans has gone up, as SMEs need more financial support to overcome this crisis.
"We are prioritising entrepreneurs who have been hit the hardest by the pandemic, and those who could not secure bank loans. We are prioritising women too, and 25%-30% of those who received stimulus loans from the foundation are women entrepreneurs.
Lauding the government for the move, National Association of Small & Cottage Industries of Bangladesh (NASCIB) President Mirza Nurul Ghani Shovon said, "SME entrepreneurs received the loans under the stimulus package without any hassle.
"This has been very helpful amid the pandemic."
SME Foundation's disbursements
The SME Foundation disbursed Tk100 crore through 12 banks and non-bank financial institutions.
Among them, Brac Bank disbursed the highest amount, to the tune of TK30 crore to 397 entrepreneurs, while the IDLC disbursed the second highest amount of TK27 crore to 212 entrepreneurs. Four of the 12 banks did not disburse any amount.
SME Foundation's officials recently told The Business Standard that loans sought by entrepreneurs were eight times higher than the money allocated under the scheme.
As such, the loan facility should be further extended to help the SMEs recover from Covid-19 shocks, the officials said.
Entrepreneurs can apply for loans ranging from Tk1 lakh to Tk75 lakh at 4% interest with a maximum 24-month repayment period based on banker-customer relationship.
SME sub-sectors, potential SME clusters, women, physically-challenged, transgender and new entrepreneurs, and those in marginalised areas and ethnic communities across the country are being prioritised, insiders said.
The BSCIC facilitated and supervised the disbursement of loans through its own channels throughout Bangladesh. Seventy-two percent of the recipients are from Rajshahi, Khulna and Chittagong divisions.
As there was a high demand, the BSCIC fully disbursed the money by 20 June, though the deadline was 30 June.
Among the recipients, 926 are men and 490 women. The highest number of recipients is from Rajshahi division where 403 entrepreneurs took Tk12.90 crore in loans.