Acleda Bank signed an agreement yesterday with the Asia Development Bank (ADB) for a $75 million loan to use for longer-term lending to the Kingdom’s smallest businesses.

In Channy, president and group chief executive officer of Acleda Bank, told the Post yesterday that saving deposits – traditionally used to fund loans – are usually no longer than 12 months, which restricts the length of time the bank is able to lend.

The ADB cash injection will give Acleda sufficient funds to be able to lend to businesses over an extended period.

“There is a big demand for loans with long periods among Cambodia’s micro- and small-business owners,” Channy said. “The ADB’s loan allows us to expand loans to businesses up to average periods of three to four years.”

The loan from the ADB is for five years and will be paid back at a commercial rate, Channy added.

Currently, micro loans offered by Acleda range from $2,500 to $5,000 for a period of up to 24 months while loans between $5,000 and $10,000 are up to 36 months.

Christine Engstrom, director of the ADB’s Private Sector Operations Department, said in a statement yesterday that the new funding will help generate income and employment in Cambodia’s rural areas, where 90 per cent of the Kingdom’s poorest people live.

“ADB will provide stable, long-term financing that currently cannot be raised from the local market and is needed to help the bank address the maturity mismatch on its balance sheet,” the release said.

The loan is the first to a commercial institute from the ADB in Cambodia.

Te Taing Por, president of the Federation of Associations for Small and Medium Enterprises of Cambodia, welcomed increased access to longer-term funding yesterday, but said more was needed to reduce the costs required to pay the loan back.

“The interest rate is still high and it is tapering the capacity of SME owners to profit from their businesses,” he said. “It makes it difficult for businesses to expand their production.”