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Understanding Credit Guarantee-Interview with LOLC Microfinance Institution

Posted on by Sorn Chhorvyvatey

Read and Download in PDF: Hear from Our PFIs – Interview with LOLC Microfinance Institution

1. What is LOLC’s perspective toward the credit guarantee schemes and why does LOLC to partner with CGCC?

  • LOLC Management is pleased to participate with CGCC to seize the partnership opportunity to further expand the market through new lending with CGCC guarantees. This credit guarantee scheme is very important for both LOLC and its clients, especially those who do not have collateral to provide access and encourage small and medium enterprises in Cambodia to access easy capital at low-interest rates to rehabilitate, start or expand their businesses.
  • LOLC joins CGCC as a participating financial institution, seeing that this credit guarantee scheme plays an important role in supporting the overall national economic growth, giving access to small and medium enterprises in Cambodia to access to financing to rehabilitate, start and expand their businesses, at the same time providing local employment opportunities for people to have jobs and income to support their families.

 

2. How do the credit guarantee schemes benefit LOLC and your customers?

In collaboration with CGCC, LOLC has the opportunity to further expand the potential market and have the confidence to expand lending to potential clients who have enough repayment capacity and want to expand their businesses but do not have sufficient collateral. In addition, the CGCC credit guarantee scheme plays an important role in fulfilling the needs of clients to expand their business and eliminate their worries from the words, “No matter how good his/her business is, without collateral, they are not able to borrow money from microfinance institutions or banks”. But now, even without collateral, clients can borrow money from microfinance institutions or banks to do business if they are able to make repayments and have a clear business plan.

 

3. What is LOLC’s strategy in structuring loans with CGCC’s guarantees? What are the main criteria of LOLC’s loan assessment?

In fact, LOLC has developed some clear strategies in structuring loans under the CGCC credit guarantee, such as:

  • Providing loans to clients who have clear and legal business, good cash flow, good credit history, whether the clients have collateral or no collateral, especially lending to clients who are small and medium enterprises (SMEs) aiming to expand their businesses, which contribute to society by providing employment to people with a decent income to support their daily family life.
  • Providing loans to clients who have a risky business but expect the business to improve soon.
  • Providing loans to key priority sectors that can contribute to the rehabilitation and upliftment of clients affected by the Covid-19 pandemic, which LOLC expects clients’ businesses to improve soon.

To assist potential clients in obtaining a guaranteed loan, LOLC has some criteria for loan assessment as the following:

  • Clients shall have clear and legal businesses.
  • Clients shall have a good cash flow to be eligible to get the loan and be able to repay it back.
  • Clients shall have a good reputation and good repayment history.
  • Clients shall have a clear business plan and clear purpose of using the loan effectively.
  • Clients can have some working capital in their business.
  • The client’s business is in good condition with quality products and services, reasonable prices, market needs, staff, and leaders with experience and skills.
  • Clients who have or do not have collateral or have collateral but not sufficient can also get the loan.

 

4. LOLC is CGCC’s Top 4 PFIs in disbursing guaranteed loans in 2022. What is the LOLC’s strategy to keep up with this momentum and to further expand the disbursement of guaranteed loans in 2023?

LOLC will continue providing more credit to clients, for those who have collateral and no collateral, to meet their needs for all sectors to improve their living standards and to continue contributing to the royal government to promote economic growth in Cambodia. Through this, LOLC will further encourage the branch management to disseminate this credit guarantee scheme widely to all target customers, especially new customers who have not yet received a loan from LOLC, for clients who have collateral or do not have collateral or have collateral but not sufficient. The most important thing is that clients have a clear legal business, a good reputation, a good credit history, strong cash flow, and good business conditions.

 

5. Besides providing guaranteed loans, what LOLC and CGCC should do together to support the MSMEs in Cambodia?

In addition to providing credit services, CGCC and LOLC will continue working together to support non-financial services to increase the understanding or additional skills related to financial literacy to entrepreneurs, especially small and medium business owners in Cambodia, to give them more knowledge on governance, financial literacy such as cash management, expense management, which contributes to more efficient business management of clients.

 

CGCC provides $120M credit guarantees to biz

Posted on by Sorn Chhorvyvatey

The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of $120 million to businesses as of February 2023.

CGCC announced on Wednesday that it supported 1,367 businesses by providing credit guarantees for their loan applications as of the end of April 2023.

The report stated that a significant portion of the loan guarantees were used for working capital, investment, business expansion, and capital expenditures.

The total amount of outstanding guaranteed loans was $97.5 million, while the total amount of outstanding guaranteed obligations was $70.32 million.

It said that there are 1,249 small and medium-sized businesses (SMEs) and 118 large businesses in Cambodia.

About 550 were women-owned, 513 were secured loans, and 854 were unsecured loans.

CGCC said that various credit guarantee schemes played a vital role in strengthening entrepreneurship and improving financial inclusion in Cambodia, particularly during the Covid-19 pandemic, by facilitating the smooth distribution of loans.

It launched three guarantee schemes so far, including the Business Recovery Guarantee Scheme (BRGS) in March 2022; the Co-Financing Guarantee Scheme (CFGS) in September 2021; and the Women Entrepreneurs Guarantee Scheme in April 2022. The CGCC also extended the CFGS to the tourism sector.

The CGCC, which is under the Ministry of Economy and Finance, extended the BRGS from January 1, 2023, until the $200 million scheme is fully utilized.

These guarantee schemes are a way to help businesses get the money they need to grow and succeed. They are a valuable tool for supporting entrepreneurship and financial inclusion in the country.

The extension of BRGS will include updates to some of its features, such as the scheme period, the definition of MSMEs and large firms, and the maximum loan amount for each guarantee.

BRGS aims to help businesses, including MSMEs and large firms, obtain formal loans from participating financial institutions for working capital, investment, and business expansion.

CGCC, the first credit guarantee institution in the country, was established in August 2020, during the Covid-19 pandemic, to provide timely credit to support the rehabilitation and sustainability of local businesses.

The Cambodian Credit Guarantee Corporation has played an important role in serving the needs of small and medium enterprises in Cambodia, which are struggling during the epidemic of Covid-19 and the inflation crisis, and need credit from banks for their businesses.

It played a vital role in supporting SMEs who have been struggling during the Covid-19 pandemic and the inflation crisis, and they need credit from banks to keep their businesses afloat.

Credit to : Khmer Times Published on May 19, 2023

Courtesy visit by CGCC to NBC to discuss on the current situation of the credit market in Cambodia

Posted on by Sorn Chhorvyvatey

On Friday, 12 May 2023, at the National Bank of Cambodia (NBC), Credit Guarantee Corporation of Cambodia (CGCC), led by Mr. Wong Keet Loong, CEO of CGCC, paid a courtesy visit to H.E. Rath Sovannorak, Assistant Governor and Director General of Banking Supervision of NBC.

CGCC’s CEO, Mr. KL Wong was very grateful for the warm welcome of H.E Sovannorak and his team and was very pleased to update on CGCC’s latest progress in providing credit guarantee and CGCC’s strategy that requires close cooperation and support from NBC.

In response, H.E. Sovannorak praised the progress made by CGCC and expressed his support for CGCC’s mission to provide guarantees on loans disbursed by banks and microfinance institutions (MFIs) to businesses that lack collaterals, especially SMEs, the backbone of the economy,​ and to raise SMEs awareness on financial literacy.

The meeting also discussed the latest development in the banking sector, new NBC regulations as well as ways to enhance cooperation to improve financial inclusion and access to finance.

Credit Guarantee Corporation of Cambodia Partners with Cambodia Chamber of Commerce to Hit Aim of $100M in Loans for 2023

Posted on by Sorn Chhorvyvatey

Cambodia Investment Review

The Credit Guarantee Corporation of Cambodia (CGCC) and Cambodia Chamber of Commerce (CCC) have entered a strategic partnership to improve access to guaranteed loans for Micro, Small, and Medium Enterprises (MSMEs) in Cambodia.

The partnership was formalized with a Memorandum of Understanding (MoU) signing ceremony. This collaboration aims to provide support to MSMEs, primarily CCC members, enabling them to obtain financing despite collateral challenges and promote financial literacy across the country.

Read more: Give a Day on Credit Guarantee Schemes & Its role in Enterprise Development

CGCC is a state-owned enterprise that provides credit guarantees on loans disbursed by participating financial institutions, offering support to viable businesses that lack collateral when applying for loans.

On the other hand, CCC, the National Chamber of Commerce, represents the interests of the business community in Cambodia and plays a crucial role in promoting the private sector’s development and supporting MSMEs’ growth. This partnership will allow CCC members to benefit from CGCC’s guarantee services, providing additional security to partnering financial institutions and making it easier for CCC members to access financing.

Improving financial inclusion and financial literacy

H.E. Oknha Nguon Meng Tech, Director General of CCC, emphasized the importance of MSMEs in Cambodia’s economic development and the challenges they face, particularly financial constraints. The partnership between CCC and CGCC aims to promote access to guaranteed loans for MSMEs’ development and deepen the cooperation between the two institutions.

CGCC CEO Wong Keet Loong noted that the MoU with CCC is a significant milestone for CGCC, as it allows the organization to reach CCC members across the country. Together, CGCC and CCC will support the development of SMEs in Cambodia by improving financial inclusion and financial literacy.

The CGCC has been organizing seminars to inform the business community in Cambodia about guaranteed loans, such as the recent seminar held in Svay Rieng Province in collaboration with the Svay Rieng Chamber of Commerce. More than 50 participants attended, including management and staff of participating financial institutions and small and medium business owners in Svay Rieng.

Credit Guarantee SOE, Top Trade Body in MSME Tie-up

Initially launched as a tool to close the credit gap that emerged between small businesses during the pandemic, the CGCC issued its first guarantee in April 2021, the CGCC has already supported 1,275 businesses by providing credit guarantees for their loan applications, amounting to $113.6 million. Wong Keet Loong has set an ambitious goal for CGCC in 2023: to provide guarantees to 1,500 SMEs and guarantee $100 million in loans.

However, the rise in global interest rates might impact the CGCC’s growth. Loong pointed out that the increasing cost of funding due to rising US interest rates affects financial institutions and their lending capabilities. Despite these challenges, the CGCC remains committed to expanding the reach of its guarantees.

A focus on female-led businesses

The CGCC currently offers four different guarantee products, including the Women Entrepreneurs Guarantee Scheme (WEGS), aimed at supporting women and female-owned businesses.

According to CGCC’s data, 40% of its guarantees go to female-owned businesses, while 65% of Cambodian MSMEs are run by women. By increasing financial literacy and awareness of credit guarantees, the CGCC aims to bridge this gap and promote female entrepreneurs’ growth in Cambodia.

Read more: CBC and CGCC ink partnership to promote SME and women’s access to finance

One factor contributing to the gap between female-owned businesses and those receiving guarantees is the lack of registration for many women entrepreneurs. Improving financial literacy can address this issue, resulting in more confident, informed entrepreneurs who can negotiate better loans.

Mr. Loong has previously explained that CGCC supports unregistered businesses for their first year, with the expectation that they will register by their anniversary. If they remain unregistered, an additional 0.5% charge is applied, incentivizing businesses to formalize their registration. This approach aims to increase the number of registered female-owned businesses while still providing initial support.

The partnership between CGCC and CCC is a testament to their shared commitment to promoting economic growth and development in Cambodia. By working together, the two organizations will help SMEs overcome financing challenges and unlock their potential to drive economic growth in the country.

Credit to: Cambodia Investment Review, Published on 02 May 2023

Credit Guarantees to SMEs Reach $113 Million

Posted on by Sorn Chhorvyvatey

The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of $113.6 million to businesses as their working capital for expansion in the first quarter of this year.

CGCC said in a report that by the end of the first quarter it supported nearly 1,300 businesses by providing credit guarantees for their loan applications, amounting to $113.6 million.

The large portions of loan guarantees were used as working capital and other purposes of investment or business expansion, and capital expenditure, the report mentioned.

Various credit guarantee schemes played crucial roles in strengthening entrepreneurship and enhancing financial inclusion in Cambodia, especially during the Covid-19 pandemic, through the smooth disbursal of loans, CGCC said.

For SMEs and MSMEs, it improves financial inclusion. It enables them to borrow without having the burden of providing collateral whenever their business capacity grows and they have higher loan requirements.

The CGCC has come up with three guarantee schemes so far — the Business Recovery Guarantee Scheme (BRGS) launched in March 2022, the Co-Financing Guarantee Scheme (CFGS) unveiled in September 2021 and the Women Entrepreneurs Guarantee Scheme, which was launched in April 2022, besides the extension of the CFGS to tourism.

The CGCC of the Ministry of Economy and Finance has extended the BRGS from January 1, 2023, until the $200-million scheme is fully utilized to support businesses including MSMEs as well as large firms by enhancing their access to formal loans from the Participating Financial Institutions (PFIs) for working capital investment and business expansion.

Updating some scheme features, including the scheme period, the definition of the micro, small and medium enterprises (MSMEs) and large firms, and the maximum loan amount for each guarantee are on the extension of BRGS.

BRGS aims to support businesses, including MSMEs and firms, to enhance their access to formal loans from Participating Financial Institutions for working capital, investment, and business expansion.

Credit to: Khmer Times, Published on 25 April 2023

Credit Guarantee SOE, Top Trade Body in MSME Tie-up

Posted on by Sorn Chhorvyvatey

State-owned Credit Guarantee Corporation of Cambodia Plc (CGCC) and Cambodia Chamber of Commerce (CCC) are joining forces to foster better access to guaranteed loans for the development of the Kingdom’s micro-, small- and medium-sized enterprises (MSME), and to provide support to these smaller businesses, “mainly CCC members”, according to a statement.

A memorandum of understanding (MoU) was signed to this effect between CGCC CEO Wong Keet Loong and Nguon Meng Tech, director-general of the CCC – the Kingdom’s apex trade body, at a ceremony last week, the statement noted.

“This cooperation will provide support to MSMEs – mainly CCC members – for greater access to finance despite collateral challenges, and to promote financial literacy, including credit guarantees to CCC members across the country,” it said.

Meng Tech underlined the damage wrought by the Covid-19 crisis on regional and global economies, especially how MSMEs have struggled to procure sufficient funds to keep their doors open.

“The MSMEs play significant roles in economic development. However, they face a lot of challenges, particularly financial constraints. In this regard, the MoU signing [by] CCC and CGCC today aimed specifically to promote access to guaranteed loans for the development of MSMEs.

“The MoU signing is also a positive sign that will help strengthen and deepen the cooperation between the two institutions,” he said in the statement.

The CGCC’s Wong added in the statement: “This MoU signing with the [CCC] is an important milestone for CGCC, as it enables CGCC to reach out to the members of CCC across the country.

“CCC, being an established business chamber with many SME [small- and medium-sized enterprises] members, will be a key partner to CGCC in promoting the understanding of the benefits of the credit guarantee,” the Malaysian said.

“Together with CCC, we can support the development of SMEs in Cambodia by improving financial inclusion and financial literacy,” he added.

The statement lauded the CGCC-CCC partnership as a demonstration of “a shared commitment to promoting economic growth and development” in the Kingdom. “By working together, the two organisations will help SMEs overcome financing challenges and unlock their potential to drive economic growth in the country,” it said.

Cambodia Post Bank Plc (CPBank) CEO Toch Chaochek commented to The Post on April 30 that the CGCC’s credit guarantees have played an “important role”, as collateral for loans, in ensuring access to formal finance among MSMEs.

“With the CGCC’s support, our MSMEs have been able to access more funds to support their businesses after being hit so hard by the Covid-19 pandemic over the past two years,” he said.

Incorporated in November 2020, the CGCC is run under the Ministry of Economy and Finance’s technical and financial assistance. The state-owned enterprise’s (SOE) central mission is “to provide credit guarantees to lenders on loans made to businesses based on international standards to share the risk with lenders and to improve financial inclusion”, its website says.

The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.

The enterprise announced that it had issued a total of 1,275 Letters of Guarantee (LG) for loans worth $113.6 million equivalent as of March 31 – up eight per cent from end-February and up 258 per cent year-on-year, in terms of value. MSMEs accounted for 1,173 – or 92 per cent – of the LGs.

As of March 31, the outstanding guaranteed amount was $65.4 million out of the $90.7 million worth of loans covered by the LGs, as noted by the CGCC, remaining in the 70-80 per cent target range at just over 72 per cent.

Credit to: The Phnom Penh Post, Published on 30 April 2023

Cambodia’s Credit Guarantee Agency, Chamber of Commerce Sign MoU to Boost Loan Access for MSMEs

Posted on by Sorn Chhorvyvatey

PHNOM PENH, April 28 (Xinhua) — State-owned Credit Guarantee Corporation of Cambodia (CGCC) and the Cambodia Chamber of Commerce (CCC) have signed a memorandum of understanding (MoU) to promote access to guaranteed loans for the development of micro, small and medium enterprises (MSMEs), said a joint statement on Friday.

The cooperation will provide support to MSMEs, mainly CCC members, with greater access to finance despite collateral challenges, and promote financial literacy, including credit guarantees to CCC members across the Southeast Asian country, the statement said.

The CGCC is a state-owned enterprise providing credit guarantees on loans disbursed by participating financial institutions to support viable businesses that lack collateral when applying for loans, the statement added.

CGCC Chief Executive Officer Wong Keet Loong said the MoU will make it easier for CCC members to access financing, and demonstrate a shared commitment to promoting economic growth and development in Cambodia.

“Together with CCC, we can support the development of SMEs in Cambodia by improving financial inclusion and financial literacy,” he said. “By working together, the two organizations will help MSMEs overcome financing challenges and unlock their potential to drive economic growth in the country.”

CCC Director-General Nguon Meng Tech said the MSMEs play significant roles in economic development, but at the same time, they face a lot of challenges, particularly financial constraints.

“The MoU is a positive sign that will help strengthen and deepen the cooperation between the two institutions,” he said.

Incorporated in 2020, the CGCC had supported 1,275 businesses by providing credit guarantees for their loan applications in a total amount of 113.6 million U.S. dollars as of March 2023, the statement said.

Credit to: Xinhua, Published on 28 April 2023

CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”

Posted on by Sorn Chhorvyvatey

On 03 April 2023, CGCC organized the first Annual Town Hall meeting, a gathering of all CGCC staff to report on progress and milestones to the Executive Committee (Exco) of CGCC as well as sharing with the staff on the previous year’s and the first quarter of 2023 progress, especially on the strategy and action plan of each respective departments in 2023.

CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”
CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”

This town hall meeting is not only for sharing the progress report and plans from all departments, but also for a dialogue platform to openly discussion and obtain recommendations from management on the direction of CGCC’s operations and vision in improving financial inclusion and develop SMEs in Cambodia.

Within the 2 years of operation, CGCC is strongly supported by the Royal Government, and under the direct guidance from the Ministry of Economy and Finance (MEF). CGCC operates with the strong leadership of management, who has extensive experiences in banking and financial sector. As such, CGCC has grown steadily, and as of the end of the first quarter of 2023, the CGCC has more than 40 employees working in solidarity and same goal to achieve the vision of the company.

CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”
CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”
CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”
CGCC Town Hall Meeting 2023 on “Milestones and Strategy Plan”

Click here to know more: 13th Board of Directors Meeting of Credit Guarantee Corporation of Cambodia (CGCC)

CGCC provides $105M credit guarantees to over 1K businesses

Posted on by Sorn Chhorvyvatey

The Credit Guarantee Corporation of Cambodia (CGCC) provided credit guarantees of $105 million as of February to businesses as their working capital for expansion.

In a factsheet issued on March 10, CGCC said that as of the end of February it has supported 1,155 businesses by providing credit guarantees for their loan applications, amounting to $104.9 million.

Large portions of the loan guarantee were used as working capital and other purposes of investment or business expansion, and capital expenditure, the report mentioned. As of January 2023, the outstanding guaranteed loan was $81.6 million while the outstanding guaranteed amount was $58.8 million.

Various credit guarantee schemes have played a crucial role in strengthening entrepreneurship and enhancing financial inclusion in Cambodia, especially during the Covid-19 pandemic, through the smooth disbursal of loans, CGCC said.

The CGCC has come up with three guarantee schemes so far — the Business Recovery Guarantee Scheme (BRGS) launched in March 2022, the Co-Financing Guarantee Scheme (CFGS) unveiled in September 2021 and the Women Entrepreneurs Guarantee Scheme launched in April 2022, besides the extension of the CFGS to tourism. The CGCC of the Ministry of Economy and Finance has extended the BRGS from January 1, 2023, until the $200-million scheme is fully utilised.

Updating some scheme features, including the scheme period, the definition of the micro, small and medium enterprises (MSMEs) and large firms, and the maximum loan amount for each guarantee are on the extension of BRGS.

BRGS aims to support businesses, including MSMEs and firms, to enhance their access to formal loans from Participating Financial Institutions for working capital, investment, and business expansion.

Credit to: Khmer Times, Published on 20 March 2023
You might be to know more about: CGCC Credit Guarantees Climb to $45.5M

CGCC-guaranteed loans jump 13% year-to-date, top $104M

Posted on by Sorn Chhorvyvatey

Credit Guarantee Corporation of Cambodia Plc (CGCC) reportedly issued a total of 1,155 Letters of Guarantee (LG) for loans worth $104.9 million equivalent as of February 28 – up 13 per cent year-to-date – as part of its mission to improve financial inclusion among small- and medium-sized enterprises (SME) and promote the sustainability and expansion of businesses worst hit by Covid-19.

As of January 31, the outstanding guaranteed amount was $58.9 million out of the $81.6 million worth of loans covered by the LGs, as noted by the state-owned enterprise in a new report, remaining in the 70-80 per cent target range at just over 72 per cent.

The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.

Cambodia Microfinance Association (CMA) chairman Sok Voeun lauded the CGCC’s credit guarantee arrangements as important tools for SMEs to access formal unsecured loans to keep their businesses afloat and expand in light of Covid-19 bruises.

He told The Post on March 13 that commercial banks accounted for 80 per cent of loans covered by the 1,155 LGs, while microfinance institutions (MFI) “partnering with the PFI” constituted the rest.

On the other hand, banking institutions accounted for about 95 per cent of the $104.9 million loan value, he said.

“We’ve provided credit to most of the priority sectors, including services, agriculture and manufacturing,” he affirmed.

“We are happy to join the CGCC because risks are guaranteed. We’ve noted that since the beginning of the project, the rate of bad loans has been minimal because the businesses have the potential to stimulate economic activity, although they may not have collateral.

“Hence the credit guarantee scheme has been a big help for them to expand their businesses,” he said.

The finance ministry has authorised the extension of the BRGS beyond December 31, 2022, until all funds have been utilised, an early-January CGCC statement confirmed, which noted that the terms of the scheme had also been updated, including the maximum guarantee amounts for differing categories of businesses.

The statement disclosed that loans, mostly unsecured, totalling about $89 million were guaranteed by the CGCC as of December 31 under the BRGS.

Cambodia Post Bank Plc, one of the PFIs, accounted for roughly $1 million of that, all of which went to SMEs, confirmed its CEO Toch Chaochek, telling The Post on March 13 that the plan is to increase that to $5-10 million in 2023.

To this end, the bank aims to shift its focus, from large SMEs with adequate collateral that are seeking to expand, to smaller ones without the assets needed for the secured loans to do the same, he revealed.

“The CGCC project is great for SMEs that do not have the collateral to obtain the loans – they have a shot at rehabilitating and expanding their businesses,” Chaochek said.

Credit to: Phnom Penh Post, Publication date 13 March 2023