Bank loan

84% of rural entrepreneurs benefited from Tk220cr stimulus loan

The SME foundation disbursed loans of 300.19 cr to 3,106 entrepreneurs in 60 districts

01 February 2022, 14:30

Last modification: 01 February 2022, 14:43

Infographic: TBS

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Infographic: TBS

When the Covid-19 pandemic hit the country, Rebeka Moreum, an entrepreneur from Bogura, found her business on the brink of collapse with declining sales and nearly 100 employees on her payroll.

Rebeka, owner of Krishnochura Fashion House, which makes clothes and knitwear, has been trying to secure bank loans, hoping to fill the working capital gap and weather the blow from the pandemic.

Finally, in November last year, she secured a loan of Tk3 lakh at 4% interest from IPDC Finance with the help of the Small and Medium Enterprises (SME) Foundation as part of a relaunch.

“Due to the pandemic, sales have bottomed out and goods produced have been steadily piling up, leading to a shortage of capital,” she told The Business Standard.

“To overcome the loss, financial support was essential and I tried to obtain bank loans, but to no avail. Fortunately, after receiving the loan from IPDC Finance, I am able to produce products again and sales have picked up momentum,” she added.

Rebeka is one of 2,619 or 84% of entrepreneurs in the rural region out of a total of 3,106 small and micro-entrepreneurs, who have obtained loans under a recovery plan aimed at overcoming the impact of the pandemic through the SME Foundation.

Of the total number of loan recipients, 15.67% or 487 entrepreneurs were from Dhaka.

As a result of the pandemic, the government announced a Tk 1,500 crore stimulus package in the second phase for the Cottage, Micro, Small and Medium Enterprise (CMSME) sector in January last year.

Eight institutions – SME Foundation, Bangladesh Small and Cottage Industries Corporation (BSCIC), Social Development Foundation, Palli Daridro Bimochon Foundation, Bangladesh Rural Development Board, Small Farmers Development Foundation, Joyeeta Foundation and Bangladesh NGO Foundation – have been tasked with disbursing the loans and implement the recovery plan at the root level.

SME Foundation has received approval from the Ministry of Finance to disburse loans amounting to Tk 300 crore.

Through 18 banks and non-banking financial institutions (NBFIs), the SME Foundation has disbursed Tk 100 crore in the 2020-21 financial year and in the current 2021-22 financial year it has secured approval from the Ministry of Finance to release the remaining fund of Tk 200 crore.

In the first phase, the SME Foundation has disbursed Tk 100,000,000 of credits to 925 entrepreneurs across the country through June. In the second phase, it distributed the remaining Tk200 crore to 2181 entrepreneurs from October to December of the current financial year.

Among the massive number of loan seekers who have suffered losses during the pandemic, the SME foundation has prioritized small businesses and women entrepreneurs in rural areas.

According to a report by the foundation, it disbursed loans of Tk 300.19 crore among 3106 CMSME entrepreneurs in 60 districts. Of the loan recipients, 26% were women entrepreneurs and 74% were men.

A total of 197 entrepreneurs in Bogura received loans while the number of entrepreneurs in Chattogram, Kishoreganj, Narayanganj and Narsingdi were 173, 116, 161 and 118 respectively.

The SME foundation report further states that 1,553 loan recipients took out loans of less than Tk 5 lakh each, which altogether accounts for half of the total loan disbursed.

“Micro, small and medium enterprises have been the most affected by the pandemic. Therefore, the government stimulus package in the second phase targeted rural entrepreneurs,” Dr. Masudur Rahman, chairman of the SME Foundation, told The Business Standard.

He also pointed out that the foundation could not provide enough loan support based on the demands made by small and medium business owners.

“To help entrepreneurs overcome the impacts induced by the pandemic, more loan support is needed,” he stressed, urging the authorities to do the necessary in this regard.