Three private institutions have come together to provide loans to small and medium enterprises (SMEs) to boost financial access for the business expansion and sustainability amid the global economic downturn.
The agencies, Credit Guarantee Corporation of Cambodia (CGCC), Federation of Association for Small and Medium Enterprises of Cambodia (FASMEC) and Wing Bank, signed a Memorandum of Understanding (MoU) on September 22, marking a strategic partnership to promote access to guaranteed loans for the development of SMEs in Cambodia.
The MoU at Wing Bank head office was presided by Wing Bank CEO Han Peng Kwang, CGCC CEO Wong Keet Loong and FASMEC presideng Te Taing Por, said CGCC in a statement.
“The cooperation provides support to SMEs, mainly FASMEC’s members, with greater access to finance despite collateral challenges while promoting financial literacy, including credit guarantees to FASMEC members across the country.
“The partnership between CGCC, FASMEC and Wing Bank demonstrates a shared commitment to promoting economic growth and development in Cambodia. By working together, the three organisations would help SMEs overcome financing challenges and unlock their potential including improving financial literacy to drive economic growth in the country,” CGCC mentioned.
According to FASMEC’s Taing Por, the collaboration is a significant step and good support for local SMEs, which are experiencing low collateral to obtain funds to support their businesses.
“We are delighted to collaborate with Wing Bank and CGCC because it provides an opportunity for FASMEC members, who lack collaterals in finance, to expand and grow their business,” he said.
Through innovative financial solutions and the partnership, SMEs would be empowered to seek increased funds, said Han of Wing Bank. “By providing flexible banking services and credit support, we are enabling SMEs to seize growth opportunities, drive innovation, and contribute to the overall prosperity of Cambodia,” he added.
Meanwhile, CGCC’s Wong remarked that the partnership would enable CGCC to reach out to more SMEs in its outreach programmes, where nationwide workshops are conducted on SME development. “[The workshops] are part of our long-term goals to improve the growth of SMEs”.
The CGCC was established on September 1, 2020. Its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions for working capital, investment and business expansions.
It had issued a total of 1,275 Letters of Guarantee (LG) for loans worth $113.6 million equivalent as of March 31 – up eight per cent from end-February and up 258 per cent year-on-year, in terms of value. Micro SMEs accounted for 1,173 – or 92 per cent – of the LGs.
As of March 31, the outstanding guaranteed amount was $65.4 million out of the $90.7 million worth of loans covered by the LGs, as noted by the CGCC, remaining in the 70-80 per cent target range at just over 72 per cent.