The State Bank of Pakistan (SBP) has released a circular explaining the eligibility criteria, debt to equity ratio, and loan size of the Prime Minister’s Kamyab Jawan Small and Medium Enterprises (SMEs) Lending Program.
The lending program aims to provide self-employment opportunities for the youth, with mark-up and credit loss subsidies on small business loans.
The range of the loan is Rs. 100,000 to Rs. 500,000 and the loan would be provided by the banks. “The banks are also advised that with the launch of Prime Minister’s Kamyab SME Lending Program, Prime Minister’s Youth Business Loan (PMYBL) scheme would cease to exist,” states the circular.
Eligibility Criteria
All men and women, with a computerized national identity card (CNIC) aged between 21-45 years can apply for the loan. However, the lower limit for IT and e-commerce related businesses will be 18 years. The minimum educational requirement for these borrowers is matriculation and/or work experience of at least six months.
“Small enterprises (startups and existing businesses) as per definition of SBP and owned by youth as per above-mentioned age brackets are also eligible,” reads the document.
25 percent of the loans will be earmarked for women borrowers only.
Other Details
State Bank has demarcated the loan size in two tiers. Tier 1 includes loans from Rs. 100,000 to Rs. 0.5 million while Tier 2 loans will be from Rs. 0.5 million to Rs. 5 million.
The loan types are working capital and term loans with tenors of up to eight years. The maximum grace period is up to one year. The borrower’s contribution of equity will be in cash or immovable property and will be required after the approval of the loan. The debt-to-equity ratio for Tier 1 loan is 90:10 and 80:20 for Tier 2 loans.
ALSO READ
One Million People to Benefit from PM’s ‘Kamyab Jawan Program’
Security and Risk
The security requirement for Tier 1 loans will be clean with only a personal guarantee of the borrower while for Tier 2 loans, it will be according to the bank’s credit policy. To mitigate risk, the government will bear the credit losses for the principal amount on the disbursed portfolio of the banks.
The risk mitigation for the government will be up to 50 percent for Tier 1 loans and up to 10 percent for Tier 2 loans. The funds will be allocated by the Finance Division in each fiscal year’s budget according to the estimates provided by the SBP. The central bank will release the payment after the submission of consolidated claims by all the banks.
The pricing of the loans will be six percent per annum for Tier 1 borrowers while for Tier 2 borrowers will be eight percent. The government will pay the difference of cost at KIBOR+500bps for T1 loans and for T2 loans, it will be KIBOR+400bps.
The banks involved in this program include National Bank of Pakistan (NBP), Bank of Khyber, and Bank of Punjab. The State Bank has also advised other commercial banks to participate in the program. NBP will have the biggest share, up to 50 percent, in the disbursement of the total loans.
The processing time for the loan application will not take more than 15 days.
If you keep 50+ aged individuals in key government positions, this is what you’ll get. Nobody wants another loan program as there are already other options. What startups need is a government-backed venture capital firm modeled according to Y-combinator’s mantra of investing small amounts in large number of startups, with equity as a collateral. E.g. 1 million per startup for 100 startups per year at 10% equity. Even if one of them becomes a unicorn, your investment in the other 99 will be returned many-fold.
beautiful reply.
How to Apply ?
Is the ecib requires clean or some exemptions????
Good Efforts for Youth
How many time to lounch this scheme in punjab?
how can we download application form
How to Apply ?
Yeh kab start ho raha mtlb kab apply kat skty ha
Good effort for youth,
What is the last date for submissions of application form and when we will get the loan?
yeh kab start ho raha hai
How to apply???