Canadia Bank has partnered with Young Entrepreneurs Association of Cambodia and Cambodia Women Entrepreneurs Association to provide special loan offers to members of both associations.
Canadia Bank provide special loan offers to:
1. Young Entrepreneurs Association of Cambodia
Unsecured Loan Under CGCC Scheme from Canadia Bank
2. Cambodia Women Entrepreneurs Association
Unsecured Loan Under CGCC Scheme from Canadia Bank
Interest Rate as low as 13.20% p.a
Loan Size: Up to $100,000
Loan Term: Up to 5 Years without collateral
Terms & Conditions
Be a member of Young Entrepreneur Association of Cambodia (YEAC) or Cambodia Women Association (CWA).
Business must be validly registered prior to loan approval (at least by district level/delegation authorities). For expired registered, shall renewed within 3 months upon loan drawdown.
Business length shall be greater than 2 years as of application date.
Borrower must be owner of business and represent name on business registration.
Loan request for the purpose of working capital or Investment/Business Expansion.
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1. What is your bank perspective toward the credit guarantee schemes in Cambodia and what encourage Sathapana to join as CGCC’s PFI?
Credit guarantee scheme is important in filling the financing gap for SMEs. The scheme provides credit risk mitigation to Sathapana Bank. This, in turn, helps us to extend loans to SMEs which contribute significantly to the economy of Cambodia. The Credit Guarantee of Cambodia (CGCC) therefore plays a crucial role in supporting credit access for SMEs in the country.
2. After signing a partnership with CGCC and becoming one of the most supportive CGCC’s PFIs in disbursed guaranteed loans, how do the credit guarantee schemes benefit the bank and your customers?
Majority of the lending products in Cambodia are secured loans. We saw working with CGCC as a good opportunity for us to extend our support to our customers who require funding to help their business grow with no collateral needed. The scheme allows us to innovate and provide a 100% hard collateral-free loans to business owners. We are proud to be the first bank to do so. As of September 2022, more than USD12 million of loans have been booked under Credit Guarantee Scheme. For our clients, the scheme gives them the opportunities to continue growing their business with better access to financing.
3. What motivates Sathapana to initiate the uncollateral loan product “Business Installment Loan Program (BIL)” that is 100% unsecured loans for borrowers with the capacities to repay but lack of collateral?
In Cambodia, FIs are mainly lending against hard collaterals. Access to credit will be curtailed for business owners who do not have hard collateral to provide to FIs to secure the loans. We believe this represents a large segment of the market. Our goal is to help them to gain access to financing to help them grow while managing our credit risks.
4. Recently, CGCC, Sathapana and two other partners have jointly organized a flagship training program called “I am Financially Literate (IFL)”, how does this program support SMEs and drive more growth to their businesses including access to financing?
IFL is an executive program initiated by Sathapana Bank in a joint partnership with CGCC and two other partners. The program aims to promote and improve financial literacy for women entrepreneurs and business owners through practical training sessions. The training includes project management, operation handling, financial management, marketing, and sales. Through IFL, participants are better equipped with making financial assessments and the know-how in getting access to financing.
5. As currently, Sathapana Bank’s momentum in disbursing unsecured loans for businesses under CGCC’s guarantee is moving fast, what is the future plan/strategy of Sathapana Bank for further expanding the usage of credit guarantees all over Cambodia?
In line with the government strategy to support the tourism sector to recover from the pandemic, we are working on a program with CGCC to support the recovery scheme. In addition to this program, we are launching a few initiatives country-wide to support clients in supply chain, leveraging on our extensive branches network.
6. As the credit guarantee topic is still considered as a new topic in Cambodia, what should Sathapana Bank and CGCC do to raise awareness of credit guarantees to the borrowers?
Through IFL, Sathapana Bank and CGCC are reaching out to customers who need to help grow their businesses. This is one of the few initiatives that we are working together to create more awareness and promotion of the credit guarantees to our customers who are looking for financing but are not sure how and what are their options. We can also personalize our message and communicate the benefits of our BIL program and scheme to the meet the needs of customers from different geographical locations and industries.
As one of the first banks who become CGCC’s PFIs, what motivates Canadia Bank to utilize the credit guarantee schemes with the existing loan products of Canadia?
One of the main reasons that motivates us to use credit guarantee schemes is that we believe that the CGCC credit guarantee scheme can help potential business owners who need loans to for their businesses but do not have enough collaterals to access more capitals to meet the financial needs of their businesses, especially to recover and expand the businesses after the COVID crisis has been eased.
After adopting CGCC’s credit guarantee schemes for more than a year, how do those schemes benefit the bank and your customers?
We have provided loans under the CGCC credit guarantee schemes to more than 200 clients with a total loan size of nearly $ 20 million over the past year. Through these guaranteed loans, clients are able to expand their business in various sectors that generate more employment and contributed significantly to the country’s economic recovery.
How does Canadia Bank structure loans with credit guarantee?
We have CGCC’s guaranteed loan programs for potential clients with good credit histories and clear business plans. It can be provided to both existing customers and new customers.
Recently, both Canadia Bank and CGCC have each launched products supporting women entrepreneurs. How will the “Smart Lady Loan” and CGCC’s “Women Entrepreneurs Guarantee Scheme” (WEGS) impact women-owned SMEs in greater access to finance regarding unsecured loans?
“Smart Lady” of Canadia Bank and “Women Entrepreneur Guarantee Scheme (WEGS)” of CGCC are making a significant contribution to support women entrepreneurs to access to the finance for their business needs, avoiding high-risk and risky loans. Through these two projects, women entrepreneurs have not only been able to access their loans more easily and conveniently but have significantly reduced their financial costs, especially in the first year, which included lower interest rates and guarantee fees. In addition, women entrepreneurs will receive many other benefits through the Smart Women Lady loan program from Canadia Bank.
Canadia Bank is currently the top performer of using CGCC’s scheme, what is Canadia Bank’s strategy of further expanding the usage of credit guarantees, especially to the rural area SMEs?
We continue to reach out to our target customers, especially those who have potential businesses but do not have sufficient collateral to secure a loan. We will also continue to link credit guarantee schemes with our new loan products to provide a wider range of options for our customers.
As the credit guarantee topic is a new topic in Cambodia, how should Canadia Bank and CGCC do to raise awareness of credit guarantee to the borrowers?
In order to raise awareness about credit guarantee, we should continue to promote it more comprehensively, especially reach out to more business owners through social media, workshops, business associations, etc.
Credit guarantee aims to support businesses, especially SMEs, access to formal loans. Under CGCC’s current schemes, CGCC provides credit guarantees on loans disbursed by banks and microfinance institutions that are the participating financial institutions (PFIs) to the borrowers. To reap the benefits of credit guarantees, the borrowers must be ready to apply for loans from the PFIs in the first place. Understanding how the PFIs assess the borrower’s creditworthiness helps the borrower better prepare to get the guaranteed loans.
Conditions
5 important things SMEs should understand to apply for guaranteed loans!
Before approving a loan, the bank must be convinced about the loan purpose and the appropriate loan amount for such purpose. How can the borrowers convince the bank? A reliable business plan and financial statement are good testimony to justify the loan purpose and amount. A proper business plan and financial records not only make it easier to borrow but also allow borrowers to critically examine the current business condition and plan better for success. Precisely, they help gauge the appropriate loan amount and repayment capacity. Indeed, borrowing the right amount matters. A surplus borrowing costs unnecessary accumulated interest, fees, and prepayment penalties, while inadequate borrowing may hinder potential business growth. This is called “condition,” one of the 5 Cs that banks use to evaluate borrowers’ creditworthiness.
Collateral
5 important things SMEs should understand to apply for guaranteed loans!
Given that the condition is satisfied, banks also require “collateral” to protect themselves against loan default. The banks typically provide loans worth about 70% of the borrower’s collateral value. The collateral requirement is one of the main challenges for borrowers’ access to loans from banks. According to IFC, of all small and medium enterprises that approached banks for loans, 66% were rejected because of lacking collateral requirements. This is why CGCC comes in. CGCC provides credit guarantees to banks to act as collateral on behalf of the borrowers. CGCC’s PFIs can assess the borrower’s creditworthiness by treating the credit guarantee as the borrower’s collateral. This reduces the collateral burden for the borrowers when applying for loans.
Capacity
5 important things SMEs should understand to apply for guaranteed loans!
The ability to repay the loan is the fundamental requirement for the bank to approve a loan. Regardless of satisfactory conditions and collateral or CGCC’s guarantees, the banks would not lend, and CGCC cannot guarantee if the borrowers cannot prove that they can repay the loans. So how can the borrower justify the “capacity” to repay? Again, this is when a reliable business plan and financial record can come into play. A proper financial statement tells the borrower’s assets, liabilities, equity, income, and cash flow which are reliable sources to evaluate the repayment capacity. Plus, the business plan describes the future business trajectory in which future income can also be used to justify the repayment capacity.
Capital
5 important things SMEs should understand to apply for guaranteed loans!
If banks provide business loans, they want to know how much own “capital” the borrower put into the business. This matters because it shows the borrower’s commitment to the company where the loan proceeds will be used. It shows “skin in the game.” How can the borrower master this? The proper financial record should show the owner’s equity in the business. Official supporting documents such as partnership agreement and company registration are valid evidence of the borrower’s investment in the company. Usually, banks find it more challenging to assess informal or unregistered businesses because they lack reliable sources of the document to validate their creditworthiness. That is why businesses are encouraged to register to improve their access to finance.
Character
5 important things SMEs should understand to apply for guaranteed loans!
Another criterion to prove the repayment capacity is the “Character” of the borrower. Notably, banks investigate the borrower’s credit records, including loan repayment history, number of loans, and current loan outstanding, etc. The primary purpose is to assess the borrower’s trustworthiness. Currently, Cambodia Credit Bureau (CBC) provides comprehensive credit reporting on individuals and businesses, which is helpful for banks to evaluate the borrower’s character. However, in some instances, if your credit records are not favorable, you need to strengthen other Cs to convince the banks. For example, during the COVID-19 Pandemic, many businesses face challenges leading to late debt repayment and loan default, adversely impacting their “Character” and “Capital.” In this case, to get loans, the borrowers need to demonstrate a solid business plan which can improve “Condition” and “Capacity” and utilize CGCC’s credit guarantees which can improve “Collateral.”
As we can see, the 5Cs – condition, collateral, capacity, capital, and character – are important factors that banks evaluate the borrowers before deciding to lend. Improving the 5Cs increases the chance of getting loans from banks. A reliable financial statement and business plan can be used to validate every Cs, while a credit guarantee can help address the “Collateral” issue.
Lack of collateral is the main challenge for businesses in Cambodia to get loans. The Royal Government of Cambodia established the Credit Guarantee Corporation of Cambodia (CGCC) to address this challenge. With credit guarantees, borrowing without collateral is no longer impossible. For CGCC to yield the benefits requires a good understanding from relevant stakeholders about how it works.
Simply put, CGCC provides credit guarantees to share the credit risk with the banks on loans made to businesses. In other words, the banks can claim from CGCC if the guaranteed loan defaults. There are two main types of credit guarantee – individual guarantee whereby the guarantee covers individual loans and portfolio guarantee whereby the guarantee covers a portfolio consisting of multiple loans. Since CGCC itself is not a lending institution, it currently collaborates with banks and micro-finance institutions (MFIs) that are the participating financial institutions (PFIs) to provide guaranteed loans to businesses. As a government-backed institution with adequate capital in its account, CGCC is set to provide a wide range of guarantees on loans disbursed to Cambodian-owned businesses across the country.
Why should the lender need the credit guarantee?
Give Non-Collateral a chance! Credit Guarantee Mechanisms and Benefits for Banks, MFIs and Businesses
When lending, banks normally protect themselves by requiring collateral from the borrowers. When the borrower cannot repay the loan, the banks liquidate the collaterals to cover the loss. If the required collateral is not sufficient, the bank is unlikely to lend. The collateral requirement becomes more stringent, especially during times of uncertainty such as the COVID-19 Pandemic, because businesses are perceived to be riskier, and banks become more risk-averse. Now with CGCC, the banks can protect themselves with the credit guarantee instead of the collaterals. Currently, CGCC provides credit guarantees up to 80% of the outstanding loan principal which means that the bank bears the remaining 20% of the loss if the loan defaults. The credit guarantee empowers banks to remain competitive in the market and to lend out more to underserved borrowers who lack collaterals, what is referred to as “credit additionality.”
Why should the borrower need the credit guarantee?
Give Non-Collateral a chance! Credit Guarantee Mechanisms and Benefits for Banks, MFIs and Businesses
Credit guarantees increase the borrowing capacity. CGCC provides guarantees that act as collateral on the borrower’s behalf. Needless to say, CGCC cannot be beneficial for every business. By all means, if the business has sufficient collateral and the ability to repay the loan, the chance is that such a business does not need a credit guarantee, and the bank would also be happy to lend even without CGCC’s guarantee. However, it is common that a potential business with the ability to repay the loan is unable to borrow because of insufficient collateral. Businesses simply cannot pledge the collateral on every loan they wish to borrow. The collateral is limited. This is a huge loss to the business and the economy as a whole. With the required loan, the business could have generated more income, employed more workers, and produced goods or services that contribute to the economic growth of the country. When CGCC provides guarantees to the banks, the borrowers now have easier access to loans from the banks because the banks are willing to lend more with less collateral requirement.
Credit guarantees are used by many countries as a policy tool to improve access to finance and financial inclusion. However, never before has a credit guarantee corporation been incorporated in Cambodia. According to the World Bank, “Public credit guarantee schemes (CGSs) are a common form of government intervention to unlock finance for small and medium enterprises (SMEs). More than half of all countries in the world have a CGS for SMEs and the number is growing.” While many credit guarantee schemes have proved successful in supporting the SMEs, many have also failed.
It is still early to assess how far and how fast CGCC can support the businesses. CGCC must continue to strengthen credibility, efficiency, and transparency and adhere to the best practices including the World Bank’s principles for public credit guarantee schemes for SMEs to gain trust and support from all relevant stakeholders. What is also important at this stage is that all the players understand and start to utilize the credit guarantees for the right purposes.
“I’m Financially Literate Program” was successfully launched by Sathapana Bank, in partnership with Khmer Enterprise, Manulife Cambodia, and Credit Guarantee Corporation of Cambodia (CGCC). The second cohort of this program was organized on 08 & 09 and 15 & 16 October 2022 to provide non-financial services to SMEs and MSMEs and especially women in business.
More than 30 Entrepreneurs and business owners attended the second cohort, and shared their experiences as well as related financial issues, and they also had the opportunity to learn more about entrepreneurship, prepare financial statements for Business, understand loans with banks and choose the right loan for their businesses.
This training program is specifically designed to provide practical skills and experience related to financial literacy and business management skills, as well as access to business networks that can drive business growth for entrepreneurs, especially women entrepreneurs.
CGCC supports the accelerating SMEs’ Financial Literacy through the “I’m Financially Literate Program” second cohort
On 17 September 2022, CGCC and Maybank Cambodia co-organized the “SME Building Capacity and Capability (BCC) Programme” at Maybank Tower, participated by more than 50 SME entrepreneurs to provide business support instruments and technical advisory based on international best practices to support SME growth, productivity and innovation, as well as enhance competitiveness for SMEs.
Mr. No Lida, Deputy CEO of CGCC, remarks on the importance of this program for SMEs beyond the cooperation between CGCC and Maybank Cambodia, and Mr. Duk Sarak, Head of Community Financial Services of Maybank Cambodia, relayed the opening remark for the event. SME participants had the opportunity to learn about the topic of “Business Registration in Cambodia” from SokSiphana & Associates, “The Importance of Financial Discipline for SMEs” from Acclime Cambodia, “Access to Finance and Guarantee Scheme” from Maybank Cambodia.
CGCC and Maybank Co-organized the “SME Building Capacity and Capability (BCC) Programme”
Upon the collaboration on providing loans with credit guarantee, on November 2021, CGCC and Maybank Cambodia also co-organized the Business Forum on “Supporting SME Businesses in Cambodia” to discuss more details about the possibility of collaboration on how to support SMEs for greater access to finance despite collateral issue and the support of SME’s capacity Building and long-term growth.
CGCC and Maybank Co-organized the “SME Building Capacity and Capability (BCC) Programme”CGCC and Maybank Co-organized the “SME Building Capacity and Capability (BCC) Programme”CGCC and Maybank Co-organized the “SME Building Capacity and Capability (BCC) Programme”
“I’m Financially Literate Program” was successfully launched by Sathapana Bank, Co-sponsored by Khmer Enterprise, Manulife Cambodia, and Credit Guarantee Corporation of Cambodia (CGCC). The first cohort of this program was organized on 03 & 04 and 10 & 11 September 2022 to provide non-financial services to SMEs and MSMEs and especially women in business.
More than 30 Entrepreneurs and business owners attended the first cohort, and shared their experiences as well as related financial issues, and they also had the opportunity to learn more about entrepreneurship, prepare financial statements for Business, understand loans with banks and choose the right loan for their businesses.
This training program is specifically designed to provide practical skills and experience related to financial literacy and business management skills, as well as access to business networks that can drive business growth for entrepreneurs, especially women entrepreneurs.
CGCC supports the accelerating SMEs’ Financial Literacy through the “I’m Financially Literate Program” first cohortCGCC supports the accelerating SMEs’ Financial Literacy through the “I’m Financially Literate Program” first cohort
On 01 September 2022, Ministry of Economy and Finance and CGCC organized a Dissemination Seminar on “Guaranteed Loans to support SMEs Development in Tourism Sector” in Kampot Province, in collaboration with the Ministry of Tourism, through the provincial department of tourism, and SME bank, which was participated by more than 50 business owners in the tourism sector.
This seminar was presided by Mrs. Chin Sopheakla, Deputy Director of Kampot Provincial Department of Tourism, Mr. No Lida, Deputy CEO of CGCC, and Mr. Neav Sokun, Chief Operation Officer of SME Bank.
Dissemination Seminar on “Guaranteed Loans to support SMEs Development in Tourism Sector”
Through this workshop, SMEs in the tourism sector, including resorts, hotels, guesthouses, restaurants, etc., were informed about the benefits of getting guaranteed loans, in response to the lack of collateral when applying for loans for the purpose of improving and recovering their business that are impacted by COVID-19 pandemic.
SMEs also learned about government’s financial supporting mechanisms on favorable loans conditions such as low-interest rate through SME Bank and guaranteed without collateral by CGCC.SMEs can request for guaranteed loans for their tourism related businesses through CGCC’s “Co-Financing Guarantee Scheme for Tourism Sector” that act as collaterals for business loans in the tourism sector through “Tourism Recovery Co-financing Scheme” of SME Bank.
Dissemination Seminar on “Guaranteed Loans to support SMEs Development in Tourism Sector”Dissemination Seminar on “Guaranteed Loans to support SMEs Development in Tourism Sector”
