The Role of SME Loan in Small Business

The Role of SME Loan in Small Business Management Presented by: ICON

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§Definition of SMEs Enterprises concern Total Asset Total no. of employees (not more than) (at cost, excluding land building) Small Manufactur Tk. 50000 enterprises ing to 1. 50 crore Service Tk. 50000 to 50 lac Medium Manufactur Tk. 1. 5 to enterprises ing 20 crore service tk. 50 lac to 10 crore 50 persons 25 persons 150 persons

SME Loan q Small Business is a loan facility designed to finance small scale trading, manufacturing and service ventures, especially to help small and medium entrepreneurs to meet their short-term cash flow shortages and bridge the fund-flow gaps. Purposes • Working capital • Purchase pf capital machinery • Refurnishing office or business promises etc.

Income generation Role of SME Loan Employment generation Business Expansion

Improvement of managerial efficiency Role of SME Loan Improvement of Living Standard Economic self sufficiency

Requirements of getting loan § § § § § National ID Card Trade license TIN Business Experience Personal grantor Business plan Financial statements Mortgage Collateral Security

Financial Institutions Brac Bank: Leasing Company: v Brac Bank Ltd v Eastern Bank Ltd v Dutch Bangla Bank Ltd v City Bank Ltd v AB Bank Ltd v Bangladesh Krishi Bank v Janata Bank v United Commercial Bank v BASIC Bank Ltd v IDLC Ltd v Lanka Bangla Finance Ltd

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Brac Bank: v Started its business in 2001 v One of the fastest growing bank v Deserves 1 st position in providing SME Loan v Having 421 SME centers v Distributed Tk 14, 500 cores for SME loan purpose v Given SME loan to 320, 000 entrepreneurs Brac Bank SME Products: Apurbo Rin v Given to those people who are involved in trading, manufacturing, agriculture and agro-based industries v 3 years experience v Max loan Tk 50 Lac v Given at a competitive interest rate v Have to repay within 36 months

Anonno Rin v 2 years experience v Given to small businesses v Min loan Tk 3 Lac and Max Tk 10 Lac v Interest rate 17% v Have to repay within 36 months Digoon Rin v Given to SMEs v 2 years experience v Min loan Tk 5 Lac and Max loan Tk 30 Lac v Interest rate 17% v Have to repay within 36 months Prothoma Rin v Given to SMEs operated by women entrepreneurs v 2 years experience v Min loan Tk 3 Lac and Max Tk 10 Lac v Interest rate 15% v Have to repay within 36 months Aroggo Rin v v v Given to private health service providers 2 years business experience Min loan Tk 3 Lac and Max Tk 30 Lac Interest rate 17% Have to repay within 48 months

Durjoy Rin v Given to SMEs for working capital purpose v 2 years experience v Min loan Tk 3 Lac and Max Tk 25 Lac v Interest rate 18% v Have to repay within 5 years Proshar Rin v Given to SMEs involved in manufacturing business v 2 years experience v Min loan Tk 3 Lac and Max Tk 30 Lac v Interest rate 17% v Have to repay within 60 months Trade Plus Loan v Given to SMEs involved in exportimport businesses v 2 years experience v Max loan Tk 30 Lac v Have to repay within 6 months Business Equity Loan v Given for commercial purpose v Having business in Dhaka and Chittagong metropolitan areas v Max loan Tk 3. 5 cores

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Dutch-Bangla Bank: � Most innovative & technologically advanced bank � Estd. 1995 � Launched the first ATM booth in the country � Having most ATM booth in the country DBBL SME Products: v v v Smart SME Cash- Credit Small shop Financing Scheme DBBL Smart Women Entrepreneur Smart SME Cash- Credit: � Target customers: manufacturing, trading and service businesses � Security: loan exceed Tk. 5 lac � Loan amount: Min- 1 Lac Max- 50 Lac � Interest rate: 14%

Small shop Financing Scheme: Purpose: seasonal financing Target customers: manufacturing, wholesaling, retailing activities loan amount: Max loan 5 lac Interest rate: 17% DBBL Smart Women Entrepreneur: Target customers: SMEs run by women entrepreneurs Funding: central bank loan amount: Min- 1 Lac Max- 5 Lac Interest rate: 13%

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Eastern Bank: Started its business in 1992 One of the leading commercial bank q Its started its SME banking in 2003 q q EBL SME Products: EBL Puji: Given SMEs for any business purpose 3 years experience Min loan 5 lac & maxi loan 50 lac. Loan amount exceeding 9 lac 90 thousands requires collateral security. Have to repay within 36 months

EBL Agrim Given for any business purpose Collateral free loan Min loan 2 lac & max 9 lac 50 thousands Have to repay within 6 months Personal guarantee is required. EBL Bannijyo Given SMEs involved in import businesses 1 year experience Max loan amount 2 corers Have to repay in equal monthly installment. 30 -40% of total limit is required in the form of FD as collateral. § § § EBL Subidha Given for any business purpose Available at any EBL Branch Min loan 1 lac Collateral free up to 10 lac EBL Asha Given to sole proprietors or private limited companies 1. 5 year business experience Collateral free loan Min loan 2 lac & max 9 lac 90 thousands Have to repay within 24 months

EBL Mukti: EBL Uddog: v Given to SMEs for any business purpose v It is only given to women entrepreneurs v Collateral free loan v Max loan amount Tk 3 Lac v Interest rate 10% which is lowest in the country v Have to repay within 18 months v Given to SMEs for any business purpose v 1. 5 years experience v Min loan Tk 6 Lac and Max Tk 50 Lac v Have to repay within 60 months

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Problems Of SME Loan Disbursement 1) Delay In Repayment Of Loan 2) Trustworthiness Of Loan Borrower 3) Failure To Submit Proper Business Plan

Problems of SME Loan Disbursement Failure To Submit Financial Statement Lack Of Entrepreneurial Knowledge Lack Of Govt. Support

Problems Of SME Loan Disbursement Lack Of Available Fund High Rate Of Interest Rate

Recommendations Provide Consultancy Service Reduction Of Interest Rate Increase Fund For SME Increase Govt. Support

Conclusion: SME Loan is playing a positive role for the development of SME entrepreneurs. This Sectors can also be Well established by proper management of SME Loan. New entrepreneur now can encourage to take risk of starting business to apply their innovative ideas and to have freedom of life.

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