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SME scheme writes first loan

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The recipient of the first loan under the scheme (second left) used it to purchase an insurance policy at Sovannaphum Life to expand his tuk-tuk carriage assembly business nationwide. Hean Rangsey

SME scheme writes first loan

The Small and Medium Enterprise Bank of Cambodia (SME Bank), a state-owned bank with $100 million in government financing for loans to SMEs, announced its first loan.

In April, the Ministry of Economy and Finance rolled out its “SME Co-Financing Scheme 2020” (SCFS) joint venture with SME Bank and a number of financial institutions in conjunction with the bank’s soft launch.

Canadia Bank Plc, a partner in the venture, provided the first loan under the scheme. The client then purchased an insurance policy at Sovannaphum Life Assurance Plc to expand his tuk-tuk carriage assembly business nationwide.

Sovannaphum Life is a joint venture company between Muang Thai Life Assurance Plc and Canadia Investment Holding Plc, the holding company of Canadia Bank.

SME Bank CEO Dexter Tan said co-financing would make it easier for SMEs in Cambodia to access loans and expand their businesses.

“This is our first client and it is imperative that clients have business insurance for their business stability,” he said.

The SME Bank has allocated about 10 per cent of its total capital to SMEs, Tan said, expressing his hopes that the full $100 million would be released by the end of the year.

There are currently 33 financial institutions – SME Bank, 23 commercial banks, two specialised banks, five microfinance deposit-taking institutions (MDIs) and two microfinance institutions (MFIs) – participating in the SCFS.

SMEs can borrow up to $200,000 for working capital and $300,000 for investment capital with a maximum interest rate of seven per cent per annum and a repayment period of seven years.

Canadia Bank CEO Raymond Sia Say Guan said his bank was delighted to provide the first loan under the scheme.

Even during the ongoing health crisis, he said, Canadia Bank’s goal is to continue lending under the SCFC in support of the Kingdom’s SMEs.

He said: “We are proud that our bank will provide loans to Cambodians. Even though our economy is declining due to the global health crisis, our banks are still able to stabilise our lending to clients to grow their businesses, for example, like this first customer.”

Sovannaphum Life CEO Tan Jiak Hiang said his company is thrilled to support the national SCFC initiative in providing an insurance policy to the recipient of SME Bank’s first loan.

He said: “Our credit life insurance is specially designed for all business owners and loan borrowers. It provides a guarantee to customers via continued collateral ownership.

“In case an untimely death occurs during the loan’s tenure, Sovannaphum Life will activate the credit life insurance policy to pay off all outstanding loans to the bank on behalf of the customer. Thus, the financial burden won’t fall to the family,” Tan said.

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