The state-owned Agricultural and Rural Development Bank (ARDB) is considering reducing the interest rate from six per cent to five per cent to encourage more small entrepreneurs to join in the implementation of the government’s $50 million special credit programme.
At a seminar on credit, ARDB CEO Kao Thach told about 250 poultry and vegetable farmers in Kandal province on Thursday that ARDB is considering lowering the interest rate to support farmers.
ARDB officially released a $50 million fund in March for lending to industrial enterprises at low interest rates. Currently, ARDB offers loans ranging from $10,000 to $300,000 with a six per cent interest rate for working capital and 6.5 per cent for capital investment per annum.
For collateral loans under this special financing programme, ARDB can provide up to 80 per cent of the value of collateral, he said.
“There will be more flexibility in obtaining collateralised loans as we will accept various types of collateral, including equipment and machinery, inventory, a letter of guarantee from the buyer’s side or other letter of guarantees, and non-real estate certificates of deposit,” said Thach.
Kandal provincial governor Kong Sophorn, who was also at the seminar, asked the ARDB to ease some credit conditions for farmers to allow them to expand their businesses.
“I would like to propose a reduction in the interest rate for farmers who have access to credit for doing business and ask for payment leniency given the situation fuelled by the Covid-19 outbreak. This, in accordance with the principles of the government and the National Bank of Cambodia,” he said.
Thach said the bank is currently reviewing loan applications for seven small- and medium-size enterprises (SMEs) in the agro-industrial sector. All of them applied for a $200,000 loan – the maximum working capital loan amount.
A survey by the Ministry of Industry, Science, Technology and Innovation of 71 enterprises in the Kingdom found that they needed assistance in market research, service development, packaging, technology adoption, human resources, access to labour, access to finance, business registration, taxation and improving hygiene standards.