Myanma Economic Bank (MEB) provided Ks10 billion Small and Medium Enterprises (SME) loans as of July, said U Aung Myo Tun, Assistant General Manager from Myanma Economic Bank (Yangon Region).
MEB has provided Ks10 billion SME loans to 246 enterprises and the loans were made from public savings beginning from 1 January. Of this, ten businesses in Yangon Region were provided with a Ks 253 million loan. Most of the loans were for the manufacturing sectors, he added.
“There was no loan request from Chin State and Taninthayi Region,” said U Aung Myo Tun.
In providing the loans, MEB gave priority to manufacturing production, export sectors, import substitution, recycling, energy saving sector, technology-based manufacturing and services.
“More loans will be provided to remote areas. Kayah State does not have much of a manufacturing sector, and the bank provided a loan to a hotel even though this sector is not included in MEB’s criteria, because the bank wants tourism development in Kayah State,” said U Aung Myo Tun. MEB will provide collateral loans to SMEs up to the amount of Ks 300 million. If collateral could not be provided, credit guarantee insurance (CGI) loans up to Ks 20 million is provided with recommendation from Myanmar Insurance. Annual interest rate is 9 percent and the loan period three years.
Borrowers need to submit business plan, tax receipts, state\region government recommendations and details when applying for SME loan from the bank.
U Aung Myo Tun cautioned borrowers not to rely on brokers because some of them are making fake tax receipts to obtain SME loans from the bank.
Businesses should not believe in brokers and other loan services offered on social media. Businesses should discuss with bank managers from relevant bank branches as the loan process is quite easy and simple, he added. Once the total loan amount reaches Ks 250 billion, MEB will stop making more loans, it is learnt.
Over 90 per cent of businesses in Myanmar are SMEs and most of them are facing difficulties in raising capital, acquiring technology and access to the market.
Some businesses complained that bank loans are difficult to acquire if SME businesses does not have collateral as businesses then need to submit many documents to the bank.
U Ngwe Tun of Genius Coffee who had obtained a CGI loan said that loans need to be acquired more easily, but SME businesses also need to keep records of income, expenses, and tax receipts. The most import thing is business plan, he said. Bank loans are easy to obtain if you have full supporting documents but businesses also need to note that the banks may not lend the full amount you want, so you have to search for other financing options, added
U Ngwe Tun.
According to SME Department, over 67,000 SMEs have already registered in Myanmar, but there remain many SMEs that have not registered yet.
Besides SME loans, MEB is planning to provide two-step loans from Japan International Cooperation Agency.
May Thet Hnin