K30mil for credit scheme

The National Business

By SHIRLEY MAULUDU
THE Bank of Papua New Guinea has put aside K30 million as initial funding for the establishment of the Credit Guarantee Corporation, an official says.
BPNG governor Loi Bakani told The National yesterday that the corporation would be established as a separate entity to assist especially small and medium enterprises (SME) to have access to funding support when applying for loans from financial institutions.
“The purpose of the Credit Guarantee Corporation is to guarantee loans that are given out to financial institutions for SMEs,” he said.
“One hindrance that people face in the SME sector is the access to financing, getting loans and all that.
“Say for instance, if BSP gives out a loan, to a particular SME company, the corporation will go and guarantee, say for instance, 75 per cent of the loan.
“Which means, in the event of a default by the SME or the borrower, 75 per cent of the loan will be repaid by the Credit Guarantee Corporation.
At the time when the SME or the person goes and borrows, the risk of that loan being given out by the financial institution, is already covered by the Guarantee Corporation.
“The risk will only be 25 per cent to the financial institution.
“This only kicks in when the loan is in default.
“There will be various other requirements to determine if the loan is in default.
“That’s in cases where the person is not able to repay the loan in the event of death, the SME or person can have access to the guarantee or the 75 per cent.”
Bakani said they hoped to have the corporation launched by the end of the year.
He further noted that the National Executive Council had approved the setting up of the corporation.
“This has given us the mandate to implement it,” he said.
“It will be a registered entity, will operate on its own, with its own directors and management.
“It’s not a new thing.
“It has been proven to be successful in some countries.
“We have actually done a lot of work on how to set it up that is why we have proposed it to be structured this way.”

6 comments

  • This is good but the Financial Institution are making two things difficult for the SMEs.
    1. The requirements required for in order for the loan to be approved is too difficult for some SMEs
    2. The interest rates charged by the Financial Institution is too high.

    I hope others will support me.
    thanks
    John

  • Thanks,, that’s fine for SME business operators but how about the Government’s plans and promises on the ultimate extension and grace period for existing loan repayment for both Public and Private sector employees? Please advise the Government to implement their policy decisions during this extended SoE
    period for COVID 19 pandemic,,,

  • This is very good sheme, it will help a lot of Papua New Guineas, step forward to take back PNG. It should be only for Native Papua New Guineans, not for dual citizens or foreigners..

  • Very good plan thumbs up. But if you said is for Papua New Guinea SSSSSME’s than just do it for local Papua New Guineans only and say no to dual citizenship or foreigners.

  • Not all SME makes annual returns of one Million.Can this be brought back to one hundred thousand so that in this way can accomodate almost 90% of SME and also can give access to loan facilities.

    John

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