The Small and Medium Enterprise (SME) Foundation will provide another Taka 450 crore loans to the cottage, micro, small and medium enterprises (CMSMEs) under a government stimulus package and its own sources to help navigate the challenges of the Covid-19 pandemic.

The foundation will offer low-cost funds at 6% interest - much lower than the current bank rate of over 13% - to small and medium enterprises facing multifaceted challenges in accessing loans to expand their businesses.

Under the plan, small and medium entrepreneurs can receive a minimum loan of Taka 1 lakh and a maximum of Taka 25 lakh. However, for the purchase of capital machinery, entrepreneurs can receive a maximum loan of Taka 50 lakh.

Loans of up to Taka 10 lakh will be disbursed without collateral.

The loans will be distributed through 19 private and state-owned banks and four non-bank financial institutions. The loan repayment period is fixed at 48 months, including a six-month grace period.

To this end, the foundation signed agreements with 23 banks and financial institutions on Tuesday at a hotel in the capital.

Sonali Bank, Bangladesh Agricultural Bank, Rajshahi Krishi Unnayan Bank, Karmasangsthan Bank, BRAC Bank, Bank Asia, Dhaka Bank, Eastern Bank, Mutual Trust Bank, NRB Commercial Bank, Mercantile Bank, Prime Bank, Premier Bank, City Bank, Southeast Bank, Shahjalal Islami Bank, Bengal Commercial Bank, United Commercial Bank, Trust Bank, IDLC Finance, IPDC Finance, LankaBangla Finance and United Finance were involved in the distribution of loans.

Salahuddin Mahmud, managing director (additional charge) of the SME Foundation, and the CEOs of 19 partner banks and four financial institutions signed the agreements.

Senior Industries Secretary Zakia Sultana, and Financial Institutions Division Secretary Md Abdur Rahman Khan, among others, were present at the event.

Chairman of the SME Foundation Professor Md Masudur Rahman presided over the agreement signing ceremony.

General Manager of the SME Foundation Nazim Hasan Sattar provided a detailed overview of the loan distribution policy.

As per the plan of SME Foundation, small and medium female entrepreneurs can access 30% of the total loan fund, while their male counterparts will receive 70%. Additionally, 10% of the loans from these two categories (male and female entrepreneurs) have been allocated to SME Foundation cluster entrepreneurs.

Of the loans distributed to women entrepreneurs, 50% will go to industries in the manufacturing and service sectors, while the remaining 50% will be allocated to industries in the value chain and other sectors.

For male entrepreneurs, 50% of the total loan amount will be distributed to the manufacturing sector, 25% to the service sector, and 25% to the value chain and other sectors.

The foundation will not disburse any loans to non-productive sectors such as grocery stores, drug dealers, hardware dealers, or any businesses that cause environmental pollution.

For giving loan, the foundation will prioritise lending to several key SME sub-sectors, cluster entrepreneurs, and value chain participants.

This includes entrepreneurs engaged in manufacturing exportable goods, producing import substitutes, and those involved in ICT and technology-based creative industries who have not yet secured loans from banks.

Additionally, loans will be extended to entrepreneurs operating in underdeveloped and tribal regions, as well as to physically challenged individuals and third-gender entrepreneurs.

Previously, the SME Foundation disbursed Taka 300 crore in loans to small and medium entrepreneurs as part of the government's incentive package to mitigate the adverse effects of the coronavirus pandemic.