MEF calls for SME loans without collateral

A workshop on the potential of credit guarantee projects to improve the financial inclusion of SMEs in Cambodia on August 18. PROVIDED

The Ministry of Economy and Finance (MEF) and the Credit Guarantee Corporation of Cambodia Plc (CGCC) encourage banks and microfinance institutions (MFIs) to use credit guarantee mechanisms to boost financial inclusion and help to develop small and medium-sized enterprises (SMEs) by granting loans to businesses that lack collateral.

At an August 18 workshop on the potential of credit guarantee projects to improve financial inclusion for SMEs in Cambodia, MEF Secretary of State Ros Seilava, who is also Chairman of the CGCC, spoke about a program business takeover guarantee (BRGC) which was launched by the government. via CGCC in March of last year.

As of July 2022, the program, which has been running for over a year, supported the issuance of approximately $57 million in new loans to businesses or corporations that lack collateral through participating financial institutions.

Although $57 million may seem like a small amount, he said it was the start of a shift in lending habits without relying on guarantees from the Cambodian credit market.

Not just in Cambodia, Seilava said credit guarantee mechanisms are a political intervention tool used to support the financing of economies in countries around the world.

“I hope the National Bank of Cambodia [NBC] will establish a relevant regulatory framework and policy to incentivize and encourage banks and MFIs to use credit guarantee mechanisms to stimulate financial inclusion and the development of small and medium enterprises,” he said.

Seilava urged stakeholders to discuss the challenges, especially banking and financial institutions and business owners, to find solutions for the global use of credit guarantee mechanisms.

In addition, a study on the terms and procedures of CGCC is needed to consider adjustments and secure opportunities for cooperation between CGCC and development partners, as well as other stakeholders to develop credit guarantee projects for support specific priority sectors such as agriculture, industry and tourism. , he pointed out.

Meanwhile, NBC Deputy Governor Chea Serey said that to encourage banks or MFIs to make maximum use of this credit guarantee facility, SMEs themselves should strive to strengthen their business after the crisis. obtaining a loan, including through proper registration, so that they can obtain a credit guarantee from CGCC.

“What I see in Cambodia is that the challenges for SMEs to access financial services is that they are outside the system. Most SMEs in Cambodia are not yet properly registered, which makes it difficult for them to get a bank loan,” she said.

CGCC CEO Wong Keet Loong said that since the beginning of the third quarter of 2022, CGCC has extended its credit guarantee to the whole country, even in remote provinces, thanks to the extensive branch network of financial institutions. participants (PFI) at the national level.

“However, the CGCC still needs to do more to ensure that financial inclusion is further enhanced to benefit businesses across the country,” he said.

Song Kheng Lay, Executive Vice President and Chief Operating Officer of Canadia Bank Plc, believes there is a need for credit guarantees to help banks extend more loans to businesses or businesses, especially those that lack guarantees.

“Canadia Bank has developed a secured lending strategy as well as procedures for applying for loans from SME banks to come to banks for efficient lending,” she said.

Data from the SME department of the Ministry of Industry, Science, Technology and Innovation showed that as of July 31, 2022, a total of 43,813 SMEs were correctly registered out of “more than 520,000”. SME.