$25 million reaches 189 businesses through tourism loan program

A total of $25.15 million in loans have been disbursed to 189 tourism-related businesses under the $150 million Tourism Recovery Co-financing Program (TRCS) as of September 30 – most of which are in the sector catering – accounting for just over a sixth of the program’s funds, according to the Small and Medium Enterprise Bank of Cambodia Plc (SME Bank), a state-owned company.

Broken down by category, restaurants accounted for the most funds, with a 38% share, followed by hotels (25%), guesthouses (25%) and other businesses (12%). A total of 44% went to women-owned businesses — accounting for rounding, that would be between $10.938 million and $11.194 million.

The TRCS was rolled out on May 17 to provide a lifeline to businesses involved in the tourism value chain that are considered to have been significantly impacted by the Covid-19 crisis, and is currently being implemented with the support of 22 Participating Financial Institutions (PFIs) – including three newcomers.

The program’s loan rules and procedures were officially established on July 1, which opened the door to loan applications.

It was financed through a matching fund between the government and financial institutions, with $75 million from the national budget to be disbursed in the form of loans issued by the SME Bank, and the remaining $75 million through loans made through PFIs, which include commercial banks and microfinance institutions (MFIs).

Key TRCS offerings include a maximum interest rate of 6.5% per annum, a grace period of 24 months on principal repayments, a loan term of up to eight years, a loan amount of up to reach $600,000 and the possibility of receiving funds in either case. riel or US dollars, SME Bank CEO Lim Aun told The Post on Oct. 9, noting that some of those limits were only changed recently.

He said that from July 1 to September 30, owners of 191 tourism-related businesses applied for loans under the program from the SME Bank or PFIs, noting that two were deemed ineligible – suggesting that one request was still pending as of the end of last month.

Aun pointed out that TRCS loans had slowed due to uncertainty in the international tourism market. “However, after the easing of a number of conditions and given the recent increase in lending amounts, we are hopeful that there will be a pick-up in lending activity,” he said.

The president of the Cambodian chapter of the Pacific Asia Travel Association, Thourn Sinan, underlined that the TRCS could in theory be crucial in reviving the tourism sector after Covid-19, but in practice the conditions of the program present an obstacle. for companies that have had financial problems.

He explained that many tourism businesses and a host of other businesses have been saddled with interest-laden debt and related issues due to the inability to repay at the height of the pandemic, when profits have fallen. fall.

“Although TRCS’s interest rates are a bit lower, its lending terms have many hurdles,” Sinan said.

Either way, he called on the SME Bank to consider expanding the scope of the program to other businesses that could be seen as contributing significantly to attracting foreign visitors to Cambodia.

SME Bank lists the initial 19 PFIs as Chip Mong Commercial Bank Plc, Hattha Bank Plc, ACLEDA Bank Plc, Advanced Bank of Asia Ltd (ABA), Sathapana Bank Plc, Cambodia Post Bank Plc (CP Bank), Wing Bank (Cambodia) Plc, Prince Bank Plc, Canadia Bank Plc, Phillip Bank Plc, Asia-Pacific Development Bank Plc (APD Bank), Phnom Penh Commercial Bank Plc, CIMB Bank Plc, Saigon Thuong Tin Bank (Cambodia) Plc (Sacombank Cambodia), RHB Bank (Cambodia) Plc, Foreign Trade Bank of Cambodia (FTB), LOLC (Cambodia) Plc, Prasac Microfinance Institution Plc and CAMMA Microfinance Ltd.

The public company also notes that three new IFPs have since been integrated: Amret Microfinance Institution Plc, Hong Leong Bank (Cambodia) Plc and Cambodia Asia Bank Ltd.

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