SMEs benefit from business loans

 By JAYNE SAFIHAO

THE National Development Bank has lent K40 million of the K80 million earmarked by the government for business loans to small to medium enterprises (SME).

NDB acting managing director Moses Liu told the SME summit in Madang yesterday that the bank received the first half of the loan funds in April and lent it all by last month. 

He said the bank was waiting for the next K40 million from the government to lend to its customers.

Liu told a packed Divine Word University auditorium that former managing director Richard Maru had spearheaded the NDB’s recovery from near financial collapse in 2004.

He credited Maru, now the Commerce and Trade Minister and initiator of the inaugural SME summit, with reviving the NDB, which was now a success story for the country.

“From insolvency and changing its name four times in the past 40 years, we are now an icon. 

“The government and you own the bank. If the government owns it, then it must be fully funded,” he said.

Liu said that due to insufficient cash flow, 50% of loan applications from various SMEs in the past five years could not be processed.

He said the demands for loans from SMEs in both the formal and informal sector were far greater than the funding available.

Liu said the O’Neill government introduced a concessional interest loan rate of 6.5% under the economic stimulus package to grow the SMEs last year.

Maru supported Liu’s statement, saying that micro banks such as the People’s Microbank Ltd, NDB and Nationwide Microbank, needed continued government funding until they were able to sustain their operations. 

He added that funding assistance requested by these banks would be seriously considered by the government.