SME financing products by banks and NBFIs
It was not until 2010 that the government and policymakers recognised the importance of providing extensive credit facilities to small and medium sector entrepreneurs to promote various initiatives, especially start-up enterprises as well as ones looking to scale up. The banks and other financial institutions, however, have been providing loans to such enterprises for long, though not in the nomenclature of SME Financing.
Now, almost all banks and non-bank financial institutions (NBFI) in the country are providing loans to the sector, under different governmental schemes as well as through their own product portfolios. New Age provides a list of some of the major products available in the market, from some of the leading banks and financial institutions, for the benefit of potential entrepreneurs and those looking for further investment.
Apurbo is a loan facility for small and medium entrepreneurs, which offers minimum Tk10 lakh to maximum Tk 50 lakh in loan. To meet import-export related expenses, post import expenses, duty payment, local bill purchase and working capital, Shomriddhi loan offers Tk 1 lakh to Tk 1 crore. Shompod loan provides from Tk 10 lakh to Tk 3.5 crore while Shokti loan offers businesses Tk10 lakh to Tk 70 lakh in loan. All these products are offered against registered mortgages and the enterprises are required to have at least three years of experience. The bank also offers deposit products for SME entrepreneurs.
Brac Bank Limited
Being the youngest bank, BRAC Bank in the last ten years served 3.75 lakh customers and released around Tk 14,000 crore as loans to SME entrepreneurs. The bank at present offers a range of SME loan products. Anonno is a small scale business loan ranging between Tk 3 to Tk 10 lakh while Prothoma is a term loan of maximum Tk 10 lakh for small scale businesses operated by women entrepreneurs. These loans can be availed by a business having a valid trade license and do not require a security. These loan schemes have been operating for more than two years.
The package called Durjoy is offering Tk 3 lakh to Tk 25 lakh loan also without any security.
Dhaka Bank Limited
Recognising quite early the SME segment’s value addition and employment generation capabilities, Dhaka Bank has pioneered SME financing in Bangladesh since 2003, focusing on stimulating the manufacturing sector and actively promoting trading and service businesses.
The bank offers different revolving and renewable lines of credit against mortgage of collateral for SMEs with two years experience in the line of business and satisfactory credit report. In a range of such loan products – overdraft work order, overdraft pay order, overdraft share, secured overdraft and overdraft SME – small business can take maximum Tk 50 lakh and medium enterprises Tk 1 crore. The interest rate for male entrepreneurs in small enterprises varies from 13 to 17 per cent while for women it is 10 per cent. For medium enterprises the rate is 13 per cent, for both men and women entrepreneurs.
In the scheme of business loans under SME, Dhaka Bank offers long, mid and short term products, festival short term products, SME lease etc. While all these financial products are non-revolving and non-renewable, the maximum amount of loan and corresponding interest rates are the same as credit line products of the bank.
Eastern Bank Limited
Established in 1992 out of former BCCI Bank, EBL is now focusing more on the SME sector. It has separate, dedicated centres and desks for SMEs and also special desks for SME women entrepreneurs. It has introduced different types of specialised loan products (on equated monthly instalment basis) and also liability products for SMEs.
At present EBL has about 6,000 SME clients and approximately disburses around Tk 1,000 crore per year. The bank has collateral free loan products for small segment clients and partial secured loans for small and mid segment clients, with a repayment period up to 60 months. EBL offers a wide range of products covering small and medium enterprises, women entrepreneurs and import oriented customers.
EBL Agrim is a special product of EBL, which offers seasonal or festival loan products with single shot repayment within 1 to 6 months. Entrepreneurs who need extra finance during any business season or festival, can take loans of minimum Tk 200,000 to maximum Tk 950,000, without any collateral. Furthermore, farmers who are directly engaged in cultivation can take loans ranging from Tk 10,000 to Tk 150,000 under the EBL Krishi Rin scheme without any collateral with zero processing fee. The repayment of this scheme depends on harvesting of the crops.
This year EBL has reviewed its existing loan products to match with market demand and launched EBL Krishi Rin and a deposit product called EBL Equity Builder for SME customers. It has a plan to launch another loan product, EBL Nobodoy, this year.
EXIM Bank Limited
Established in 1999, the Export Import Bank of Bangladesh Limited now offers two different schemes for entrepreneurs of small and medium enterprises. Exim Uddyog is an investment scheme facilitating projects with the aim to provide fixed and working capital for SMEs involved in poultry, dairy, fisheries and agro-based industries etc. Loans are disbursed across Bangladesh through its branches and SME Service Centres. EXIM Abalamban loan covers general business, workshop and light engineering.
The bank disburses loans in single or multiple phases according to the nature and requirement of businesses and also offers single or multiple repayment installments as per the returns of the business. Having a record of successful business operation for two years, small entrepreneurs can borrow Tk 2 lakh to Tk 10 lakh while the medium entrepreneurs can take Tk 10 lakh minimum and Tk 50 lakh maximum, against proper collateral depending on whether it is located on the proprietor’s own land or on a leased property. On the basis of satisfactory business transaction and business requirement, the bank also offers the opportunity of enhanced investment.
IDLC
IDLC introduced lease financing in the country in 1985, and started working in small and medium enterprises in 2006. It is now by far the largest recipient of Bangladesh Bank’s SME refinancing scheme, as claimed by its chief executive officer and managing director, Selim RF Hussain. Almost 20 per cent of customer lending of IDLC group is in SME sector.
To finance small-scale trading, manufacturing and service ventures to help SMEs meet short-term cash flow needs and bridge the fund-flow gaps IDLC offers lease financing, term loan financing, working capital financing, project financing and refinancing facilities, with different terms and conditions. It also has more products such as supplier finance, women entrepreneur loan and commercial vehicle loan.
The small businesses which are a growing concern with minimum operational experience of 2 years can get minimum Tk 3 lakh to maximum Tk 75 lakh. IDLC offers loans without any collateral for up to Tk 15 lakh and partial cash-secured loans of up to Tk 35 lakh. For repayment, it offers both equal monthly installments and customized schedules. Borrowers having loan facilities with other financial institutions can also avail IDLC’s facilities.
IIDFC
Industrial and Infrastructure Development Finance Company Limited offers different SME financing schemes to potential clients taking into consideration the enterprises’ credentials, management strength, sales growth, technical soundness, cost efficiency, future prospects and their transaction behaviour with other lenders and associates, if any. Mode of repayment of IIDFC’s SME loans is equal monthly or quarterly instalment.
Among a range of products, IIDFC provides term loans for capital expenditure. The longer maturity of loans can reduce the size of instalment payments and help improve the cash flow of the enterprises. IIDFC also provides loan facilities to meet working capital requirements.
The company provides women entrepreneurs with loans as per the guidelines and regulations of Bangladesh Bank and with some favourable terms for women. It promotes such loan schemes with a dedicated desk in a bid to assure service-friendly attitude towards women entrepreneurs and treats all type of applications submitted by small and medium sector women entrepreneurs with highest priority.
The milestone of SME department in 2010 was the MoU with National Small Industries Corporation (NSIC), India, on March 30, covering various points of cooperation including development of joint ventures, demonstration and hands-on technology training for start-up entrepreneurs, installation and commissioning of SME projects and development of SME-IT Technological Park.
Islami Bank Bangladesh Limited
One of the pioneers in financing SMEs, IBBL is now providing Tk 50,000 to Tk 10 crore as credit in various manufacturing, trading and service craftsmanship. Since its inception, IBBL has introduced several investment schemes to cater to the needs of SMEs keeping in view the requirement of different sectors and various sections of people to improve their quality of life. With some 80 thousand SME partners coming under its net, the total SME investment of the bank is more than Tk 7,400crore.
Gender equity remains yet another conceptual basis of IBBL’s SME and micro-finance initiatives. Under the Women Entrepreneurs’ Investment Scheme IBBL provides upto Tk 30 lakh to women-run enterprises, and upto Tk 5 lakh without any collateral.
IBBL prioritises beneficial ideas with potential of bringing about welfare to the society in small manufacturing, cottage industries and self-employment activities. These include various light engineering sectors like iron or wooden furniture processing, agribusiness, specialist farming, seeds production and distribution, leather making or leather goods, backward linkage industries of garments and poultry sectors, in service sectors like laundry, hotel and restaurant, healthcare, diagnostic centres and educational services and small trading sectors of confectionery, book stall, drug and medicines shops, stalls of shoe, cloth, food, vegetable and different consumer items, among others.
Prime Bank Limited
Prime Bank provides small and medium enterprises with easy access to loan to help them grow further. A minimum of Tk 2 lakh to a maximum of Tk 6 lakh can be borrowed without any collateral. The bank also offers capital loan, working capital loan, seasonal loan, double loan and women entrepreneur’s loan schemes under different terms and conditions.
Capital loan is offered to the businesses opting to augment capital base for business expansion, purchase of new business space, expansion of existing outlets and capital machineries and also to purchase light or heavy vehicles for business use. Working capital loan offers businesses the loan facility to increase the working capital base by financing day to day business. The bank offers seasonal loans to grab the additional opportunities in various festivals and seasonal events by organizing special business arrangements to increase sales and profit for SME businesses. In these schemes, small enterprises can have Tk 2 lakh to Tk 50 lakh as loan while medium enterprise from Tk 2 lakh to Tk 3 crore.
Upon offering any encashable securities like FDR, both small and medium enterprises are also entitled to receive double the amount of the value of security provided. The loan amount should be ranging from minimum Tk 2 lakh to maximum Tk 50 lakh. Women entrepreneurs can get Tk 1 lakh to Tk fifty lakh in loan to expand and operate their businesses at their desired level, of which upto Tk 25 lakh can be loaned without any security.
Entrepreneurs having the experience of successfully managing the business for at least two years may apply for any of these schemes.
Standard Chartered Bank
Standard Chartered Bank provides SMEs with its wide range of business responsive products and services. To help expand the business and tackle all fund related constrains of SMEs, Standard Chartered offers business installment loans of up to Tk 70 lakh from a minimum of Tk 10 lakh. The loan requires a cash security of 30 to 50 per cent of the loan amount depending on existing repayment track record. This loan is repayable in three to five years at the interest rate of 19.5 per cent. Any business having at least three years of experience in the same business and a minimum turnover of Tk 120,00000 can apply for this loan.
Its loan scheme Orjon however has been crafted to support the business needs of women entrepreneurs and enables SMEs to obtain financing without any requirement of collateral. The features and eligibility requirements of this scheme are similar to the business installment loans, except for an interest rate of 18.5 per cent.
Standard Chartered also offers loan against property ranging from Tk 14 lakh to Tk 2.8 crore, to enterprises with annual turnover of Tk 70 lakh, at the interest rate of 16 per cent which is repayable over three to 10 years. The bank also offers trade and working capital financing and different SME transaction services, online based Straight 2 Bank service and Doorstep Banking (which allows secure banking transactions without leaving the doorstep).
Now, almost all banks and non-bank financial institutions (NBFI) in the country are providing loans to the sector, under different governmental schemes as well as through their own product portfolios. New Age provides a list of some of the major products available in the market, from some of the leading banks and financial institutions, for the benefit of potential entrepreneurs and those looking for further investment.
Apurbo is a loan facility for small and medium entrepreneurs, which offers minimum Tk10 lakh to maximum Tk 50 lakh in loan. To meet import-export related expenses, post import expenses, duty payment, local bill purchase and working capital, Shomriddhi loan offers Tk 1 lakh to Tk 1 crore. Shompod loan provides from Tk 10 lakh to Tk 3.5 crore while Shokti loan offers businesses Tk10 lakh to Tk 70 lakh in loan. All these products are offered against registered mortgages and the enterprises are required to have at least three years of experience. The bank also offers deposit products for SME entrepreneurs.
Brac Bank Limited
Being the youngest bank, BRAC Bank in the last ten years served 3.75 lakh customers and released around Tk 14,000 crore as loans to SME entrepreneurs. The bank at present offers a range of SME loan products. Anonno is a small scale business loan ranging between Tk 3 to Tk 10 lakh while Prothoma is a term loan of maximum Tk 10 lakh for small scale businesses operated by women entrepreneurs. These loans can be availed by a business having a valid trade license and do not require a security. These loan schemes have been operating for more than two years.
The package called Durjoy is offering Tk 3 lakh to Tk 25 lakh loan also without any security.
Dhaka Bank Limited
Recognising quite early the SME segment’s value addition and employment generation capabilities, Dhaka Bank has pioneered SME financing in Bangladesh since 2003, focusing on stimulating the manufacturing sector and actively promoting trading and service businesses.
The bank offers different revolving and renewable lines of credit against mortgage of collateral for SMEs with two years experience in the line of business and satisfactory credit report. In a range of such loan products – overdraft work order, overdraft pay order, overdraft share, secured overdraft and overdraft SME – small business can take maximum Tk 50 lakh and medium enterprises Tk 1 crore. The interest rate for male entrepreneurs in small enterprises varies from 13 to 17 per cent while for women it is 10 per cent. For medium enterprises the rate is 13 per cent, for both men and women entrepreneurs.
In the scheme of business loans under SME, Dhaka Bank offers long, mid and short term products, festival short term products, SME lease etc. While all these financial products are non-revolving and non-renewable, the maximum amount of loan and corresponding interest rates are the same as credit line products of the bank.
Eastern Bank Limited
Established in 1992 out of former BCCI Bank, EBL is now focusing more on the SME sector. It has separate, dedicated centres and desks for SMEs and also special desks for SME women entrepreneurs. It has introduced different types of specialised loan products (on equated monthly instalment basis) and also liability products for SMEs.
At present EBL has about 6,000 SME clients and approximately disburses around Tk 1,000 crore per year. The bank has collateral free loan products for small segment clients and partial secured loans for small and mid segment clients, with a repayment period up to 60 months. EBL offers a wide range of products covering small and medium enterprises, women entrepreneurs and import oriented customers.
EBL Agrim is a special product of EBL, which offers seasonal or festival loan products with single shot repayment within 1 to 6 months. Entrepreneurs who need extra finance during any business season or festival, can take loans of minimum Tk 200,000 to maximum Tk 950,000, without any collateral. Furthermore, farmers who are directly engaged in cultivation can take loans ranging from Tk 10,000 to Tk 150,000 under the EBL Krishi Rin scheme without any collateral with zero processing fee. The repayment of this scheme depends on harvesting of the crops.
This year EBL has reviewed its existing loan products to match with market demand and launched EBL Krishi Rin and a deposit product called EBL Equity Builder for SME customers. It has a plan to launch another loan product, EBL Nobodoy, this year.
EXIM Bank Limited
Established in 1999, the Export Import Bank of Bangladesh Limited now offers two different schemes for entrepreneurs of small and medium enterprises. Exim Uddyog is an investment scheme facilitating projects with the aim to provide fixed and working capital for SMEs involved in poultry, dairy, fisheries and agro-based industries etc. Loans are disbursed across Bangladesh through its branches and SME Service Centres. EXIM Abalamban loan covers general business, workshop and light engineering.
The bank disburses loans in single or multiple phases according to the nature and requirement of businesses and also offers single or multiple repayment installments as per the returns of the business. Having a record of successful business operation for two years, small entrepreneurs can borrow Tk 2 lakh to Tk 10 lakh while the medium entrepreneurs can take Tk 10 lakh minimum and Tk 50 lakh maximum, against proper collateral depending on whether it is located on the proprietor’s own land or on a leased property. On the basis of satisfactory business transaction and business requirement, the bank also offers the opportunity of enhanced investment.
IDLC
IDLC introduced lease financing in the country in 1985, and started working in small and medium enterprises in 2006. It is now by far the largest recipient of Bangladesh Bank’s SME refinancing scheme, as claimed by its chief executive officer and managing director, Selim RF Hussain. Almost 20 per cent of customer lending of IDLC group is in SME sector.
To finance small-scale trading, manufacturing and service ventures to help SMEs meet short-term cash flow needs and bridge the fund-flow gaps IDLC offers lease financing, term loan financing, working capital financing, project financing and refinancing facilities, with different terms and conditions. It also has more products such as supplier finance, women entrepreneur loan and commercial vehicle loan.
The small businesses which are a growing concern with minimum operational experience of 2 years can get minimum Tk 3 lakh to maximum Tk 75 lakh. IDLC offers loans without any collateral for up to Tk 15 lakh and partial cash-secured loans of up to Tk 35 lakh. For repayment, it offers both equal monthly installments and customized schedules. Borrowers having loan facilities with other financial institutions can also avail IDLC’s facilities.
IIDFC
Industrial and Infrastructure Development Finance Company Limited offers different SME financing schemes to potential clients taking into consideration the enterprises’ credentials, management strength, sales growth, technical soundness, cost efficiency, future prospects and their transaction behaviour with other lenders and associates, if any. Mode of repayment of IIDFC’s SME loans is equal monthly or quarterly instalment.
Among a range of products, IIDFC provides term loans for capital expenditure. The longer maturity of loans can reduce the size of instalment payments and help improve the cash flow of the enterprises. IIDFC also provides loan facilities to meet working capital requirements.
The company provides women entrepreneurs with loans as per the guidelines and regulations of Bangladesh Bank and with some favourable terms for women. It promotes such loan schemes with a dedicated desk in a bid to assure service-friendly attitude towards women entrepreneurs and treats all type of applications submitted by small and medium sector women entrepreneurs with highest priority.
The milestone of SME department in 2010 was the MoU with National Small Industries Corporation (NSIC), India, on March 30, covering various points of cooperation including development of joint ventures, demonstration and hands-on technology training for start-up entrepreneurs, installation and commissioning of SME projects and development of SME-IT Technological Park.
Islami Bank Bangladesh Limited
One of the pioneers in financing SMEs, IBBL is now providing Tk 50,000 to Tk 10 crore as credit in various manufacturing, trading and service craftsmanship. Since its inception, IBBL has introduced several investment schemes to cater to the needs of SMEs keeping in view the requirement of different sectors and various sections of people to improve their quality of life. With some 80 thousand SME partners coming under its net, the total SME investment of the bank is more than Tk 7,400crore.
Gender equity remains yet another conceptual basis of IBBL’s SME and micro-finance initiatives. Under the Women Entrepreneurs’ Investment Scheme IBBL provides upto Tk 30 lakh to women-run enterprises, and upto Tk 5 lakh without any collateral.
IBBL prioritises beneficial ideas with potential of bringing about welfare to the society in small manufacturing, cottage industries and self-employment activities. These include various light engineering sectors like iron or wooden furniture processing, agribusiness, specialist farming, seeds production and distribution, leather making or leather goods, backward linkage industries of garments and poultry sectors, in service sectors like laundry, hotel and restaurant, healthcare, diagnostic centres and educational services and small trading sectors of confectionery, book stall, drug and medicines shops, stalls of shoe, cloth, food, vegetable and different consumer items, among others.
Prime Bank Limited
Prime Bank provides small and medium enterprises with easy access to loan to help them grow further. A minimum of Tk 2 lakh to a maximum of Tk 6 lakh can be borrowed without any collateral. The bank also offers capital loan, working capital loan, seasonal loan, double loan and women entrepreneur’s loan schemes under different terms and conditions.
Capital loan is offered to the businesses opting to augment capital base for business expansion, purchase of new business space, expansion of existing outlets and capital machineries and also to purchase light or heavy vehicles for business use. Working capital loan offers businesses the loan facility to increase the working capital base by financing day to day business. The bank offers seasonal loans to grab the additional opportunities in various festivals and seasonal events by organizing special business arrangements to increase sales and profit for SME businesses. In these schemes, small enterprises can have Tk 2 lakh to Tk 50 lakh as loan while medium enterprise from Tk 2 lakh to Tk 3 crore.
Upon offering any encashable securities like FDR, both small and medium enterprises are also entitled to receive double the amount of the value of security provided. The loan amount should be ranging from minimum Tk 2 lakh to maximum Tk 50 lakh. Women entrepreneurs can get Tk 1 lakh to Tk fifty lakh in loan to expand and operate their businesses at their desired level, of which upto Tk 25 lakh can be loaned without any security.
Entrepreneurs having the experience of successfully managing the business for at least two years may apply for any of these schemes.
Standard Chartered Bank
Standard Chartered Bank provides SMEs with its wide range of business responsive products and services. To help expand the business and tackle all fund related constrains of SMEs, Standard Chartered offers business installment loans of up to Tk 70 lakh from a minimum of Tk 10 lakh. The loan requires a cash security of 30 to 50 per cent of the loan amount depending on existing repayment track record. This loan is repayable in three to five years at the interest rate of 19.5 per cent. Any business having at least three years of experience in the same business and a minimum turnover of Tk 120,00000 can apply for this loan.
Its loan scheme Orjon however has been crafted to support the business needs of women entrepreneurs and enables SMEs to obtain financing without any requirement of collateral. The features and eligibility requirements of this scheme are similar to the business installment loans, except for an interest rate of 18.5 per cent.
Standard Chartered also offers loan against property ranging from Tk 14 lakh to Tk 2.8 crore, to enterprises with annual turnover of Tk 70 lakh, at the interest rate of 16 per cent which is repayable over three to 10 years. The bank also offers trade and working capital financing and different SME transaction services, online based Straight 2 Bank service and Doorstep Banking (which allows secure banking transactions without leaving the doorstep).
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