CGCC launches program to provide debt guarantee to women entrepreneurs
The Credit Guarantee Corporation of Cambodia (CGCC) recently launched its Women Entrepreneur Guarantee Scheme (WEGS), which will see up to $30,000,000 provided as collateral against loans for women entrepreneurs to “improve their access to formal loans for working capital and business expansion. ”
The initiative satisfies the government’s strategic framework and economic recovery programs in the context of living with Covid-19 in a new normal 2021-2023 by encouraging commercial banks and microfinance institutions to increase additional lending by easing restrictions. credit guarantee requirements.
CGCC CEO Wong Keet Loong said Khmer time that the credit guarantee is a financial instrument that mutually supports financial institutions (FIs) and small and medium-sized enterprises (SMEs).
“For FIs, it is a risk-sharing mechanism to offer loans to clients who may be considered higher risk but have growth potential. It also supports providing additional security for the loan as it is part of the loan collateral. For SMEs, it improves financial inclusion.
This allows them to borrow without the burden of providing additional collateral whenever business capacity increases and loan requirements are higher. »
“Small/micro business owners will be able to obtain loans at affordable rates compared to informal means. By having access to borrowing, business owners will be able to expand their business, leading to income growth and improved livelihoods. We hope to some extent reduce poverty in certain segments.
A study undertaken by the International Finance Corporation found that “90% of SMEs run by women were found to be profitable,” but among these businesses there was an unmet demand for credit of around $4.2 billion. Wong cited this research as the rationale for specifically targeting women in this program.
“Cambodian women-owned businesses therefore find it difficult to provide collateral to obtain loans from FIs; many have been unable to access traditional funding. About 60% of entrepreneurs are women. Similar research shows that women entrepreneurs have better histories of repaying their loan commitments. »
CGCC is the first credit guarantee company in Cambodia, established by an undergraduate of the Royal Government of Cambodia in September 2020 as a public company under the technical and financial guidance of the Ministry of Economy and Finance.
Its mission is to “provide credit guarantees to lenders on business loans based on international standards in order to share risk with lenders and improve financial inclusion”.
The program is eligible for all types of loan facilities, including term loans, overdrafts and trade facilities, and the process is relatively simple.
“The business owner should apply for a loan from the FI. The FI will assess the business’ needs for the loan and assess its repayment capacity. The credit guarantee is part of the loan guarantee. Once the FI has approved the loan, the FI will submit to apply the CGCC guarantee. CGCC will ensure that the FI has complied with the program specifications and guidelines and will issue a letter of guarantee for the loan,” Wong said.
Wong hopes WEGS can support SMEs at all levels of the business spectrum: “We hope that commercial banks and MFIs will use WEGS to reach more women entrepreneurs by providing loans to grow their businesses. Institutions may include SMEs that may not have as many complete records, but just as much growth potential.