01.

Why Promotion of SMEs

Economic Growth Objectives
Equity Objective
Having Immense Potential to
generate Income, Employment
and forge linkage with Industrial
Development

02. SMEs include units involved in

- Manufacturing
- Trading
- Servicing

03. Identifying SMEs

by Investment limit: Tk. 1

million to Tk. 10 million.

04. Financial Needs of SMEs

- Finance : the most critical factor
for SMEs
Required for

Production
Marketing
Future Growth Financing

05. SMEs require two types of capital

-Equity/Risk Capital

-Borrowed Capital
- Short term
- Long term

06.

Sound Financial Plan

Required for SMEs :

Factors Considered
-Assessment of Total Needs of Finance
Time frame of Financial Requirements
Intensity of Uses of Finance
Sources of Finance
-Organized/Formal Sources

Com. Banks
DFIs
BSCIC, etc.

Contd. Sound Financial

- Unorganized/Informal Sources
Own Sources
Friends & Relatives
Money Lenders

07. SMEs Access to Finance :

Men of Modest Means/Low Equity
Base
Not Sharing Management and
Control
Bank Financing : Inadequate
Poor Credit Standing
- hence, depends on informal finance.

08. Study by MIDAS reveals :

SMEs have very little access to

formal finance

8.1 MAJOR FINDINGS OF THE STUDY

Entrepreneurs seeking Financial

Assistance face several difficulties at
different stages,viz.
Application submission
Processing
Sanctioning
Documentation
Disbursement

Contd. Major Financing

Lengthy Procedures and Rigid

Conditions
High Transaction Costs
Lack of Required Knowledge and Equity
Collateral
Poor Motivation and Lack of Policy
Support

8.2 Bank officials encounter several problems

in processing loan applications/proposals.

Low Entrepreneurial Base

Non-availability of Data
High Adm. Cost

8.3 Respondent- SMEs failed to get loan :

Faulty Project Profile

Unable to provide papers/Collateral

Side Payments
Lack

of

Project

Bankers
Lack of Ref.

Knowledge

of

8.4 Recommendations
Banks to open SME financing cell having policies
Simplified Loan App.
Inf. Collection by Bankers
Collateral Relaxation and Bank Supervision
Secured Financing - Movable Assets
Low Equity Requirement
Low Rate of int.
Realistic Repayment Schedule
Decentralization of Sanc. Power
Entrepreneurship Dev. Training, Etc.
Instituting a Venture Capital Fund

8.5 Probable Collaboration b/w banks and

chambers and Roles of chambers and
Association as FACILITATORS

- Identification & Training of

Entrepreneurs and Counseling

Services

8.6 Possible collaboration with

Financial Institutions
Identification of Investment Sectors
Information to Enterpreneurs
Discussion
Problems
Transfer
Projects

on

of

SME

Ownership

Financing
of

Sick