When the Covid-19 pandemic hit the country, Rebeka Moreum, an entrepreneur from Bogura, found her business on the brink of collapse with declining sales and nearly 100 employees on her payroll.
Rebeka, owner of Krishnochura Fashion House, which produces garments and knitwear products, tried to obtain bank loans, hoping to make up for the working capital shortage and overcome the blow dealt by the pandemic.
Finally, in November last year, she got a loan of Tk3 lakh at 4% interest from IPDC Finance with the help of the Small and Medium Enterprise (SME) Foundation under a stimulus package.
"Due to the pandemic, sales hit rock-bottom and the produced goods kept piling up, resulting in a capital shortage," she told The Business Standard.
"To overcome the loss, financial support was a must and I tried to get bank loans but to no avail. Thankfully, after receiving the loan from IPDC Finance, I am able to produce products again and sales have regained momentum," she added.
Rebeka is one of the 2619 or 84% of entrepreneurs from the rural region out of an altogether 3106 small and micro entrepreneurs, who came by loans under a stimulus package aimed at overcoming the pandemic's impact through the SME Foundation.
Of the total number of loan recipients 15.67% or 487 entrepreneurs were from Dhaka.
In the wake of the pandemic, the government announced a Tk1500 crore stimulus package in the second phase for the Cottage, Micro, Small, and Medium Enterprise (CMSME) sector in January last year.
Eight institutions – SME Foundation, Bangladesh Small and Cottage Industries Corporation (BSCIC), Social Development Foundation, Palli Daridro Bimochon Foundation, Bangladesh Rural Development Board, Small Farmers Development Foundation, Joyeeta Foundation and Bangladesh NGO Foundation – were tasked with disbursing the loans and implementing the stimulus package at the root level.
SME Foundation received the approval of the Ministry of Finance to disburse loans to the amount of Tk300 crore.
Through 18 banks and non-banking financial institutions (NBFIs) the SME Foundation disbursed Tk100 crore in the 2020-21 fiscal year and in the current 2021-22 fiscal it secured approval from the finance ministry to release the remaining Tk200 crore fund.
In the first phase, the SME Foundation disbursed Tk100 crore in credits among 925 entrepreneurs across the country until June. In the second phase, it distributed the remaining Tk200 crore to 2181 entrepreneurs from October-December of the current fiscal year.
Among the massive number of loan seekers who suffered losses during the pandemic, the SME foundation prioritised small-scale and women entrepreneurs from rural areas.
According to a report by the foundation, it disbursed Tk300.19 crore loans among 3106 CMSME entrepreneurs in 60 districts. Of the loan recipients 26% were women entrepreneurs and 74% were men.
A total of 197 entrepreneurs from Bogura received the loans while the number of entrepreneurs in Chattogram, Kishoreganj, Narayanganj and Narsingdi was respectively 173, 116, 161 and 118.
The SME foundation report further states that 1553 loan recipients took loans below Tk5 lakh each, which in total amounts to half of the total disbursed loan.
"The micro, small and medium enterprises were hurt the most in the pandemic. Therefore, the government's stimulus package in the second phase targeted rural entrepreneurs," Dr Masudur Rahman, chairman of the SME Foundation, told The Business Standard.
He also pointed out that the foundation could not provide enough loan support according to the demands put forth by the small and medium enterprise owners.
"To help entrepreneurs overcome the pandemic-induced impacts more loan support is required," he stressed, urging the authorities to do the needful in this regard.