The state-owned Agricultural and Rural Development Bank (ARDB) will soon disburse $20 million in special credit as part of the $50 million they released in March in loans to small and medium-sized enterprises (SMEs) in the agricultural sector.
Currently, ARDB has received 153 SME loan applications totalling around $20 million. ARDB has approved $500,000 of that amount and plans on accepting more applications, said its CEO Kao Thach.
“I think the loans will help a lot for farmers in the agricultural sector and we will continue to spread information to the locals so that they can access the loans,” he said.
The $50 million fund released in March will provide low-interest loans to enterprises and entrepreneurs in the agricultural industry ranging between $10,000 and $300,000.
The government has decided to cut the annual interest rates from six to five per cent for working capital and from 6.5 to 5.5 per cent for capital investment, without charges for services fee, it said in a press release on Tuesday.
It said it will adjust the maximum credit period from five years to seven years for investment capital while keeping a short-term maximum of two years for working capital.
But it will forbid borrowers who receive loans through this incentive to refinance them.
Unregistered SMEs can also apply for the credit, but they are required to register within one month of receiving the loan.
The government plans on expanding its credit scope to SMEs by encouraging them to use the technical services of Khmer Enterprise (KE) to facilitate their access to credit.
KE is an implementation unit of the Entrepreneurship Development Fund established by the Ministry of Economy and Finance.
An International Monetary Fund (IMF) report released in August said Cambodia’s female entrepreneurs continue to struggle because of limited access to finances for business expansion. Only three per cent have access to credit from microfinance institutions and banks.
The report estimates that the demand for credit from female entrepreneurs now stands at $4.2 billion, accounting for nearly 63 per cent of Cambodia’s $6.7 billion national budget for 2019.
A Ministry of Industry, Science, Technology and Innovation survey found that they needed help with market research and service development as well as packaging and technology adoption.
The survey also suggested that the entrepreneurs needed assistance with human resources, access to labour and finance, business registration, taxes and sanitation standards.