New entrepreneurs and banks find it hard to cope with each other in dealing with small and medium enterprises.
Small entrepreneurs see it difficult to submit papers for their loan backup to start their SME business while banks are reluctant to provide them with monetary support, apprehending higher risk.
The two issues draw back both the bank and the clients to involve with small and medium enterprises, said the authorities concerned. A new entrepreneur Abul Kalam Azad, who started handicraft business two years back taking SME loan from Trust Bank, shared his experience at the fair.
He said new entrepreneurs hardly have any access to the banks as they have no financial back up.
Kalam added that despite having potential of an entrepreneur to do good business, he fails to do that due to lack of caution money, while banks seem to be reluctant to provide loan, taking risk.
Installment payment from the beginning of the is another burden for new entrepreneurs as banks start to calculate installment from the first month.
The handicraft businessman termed the monthly installment formalities difficult for the new businessmen who have just found themselves into business.
He advocated for a grace period for payment to the bank as the installment eats up the entrepreneurs’ returns which they receive after a certain period.
Therefore, encouraged by the SME fair, if an entrepreneur starts business, he cannot do much.
Kalam pointed out that high interest rate is also the biggest barrier to the SMEs who find limitations to submit all documents that banks require to issue loan.
A seasoned SME entrepreneur, Mahfuj, said banks never give any new entrepreneur any loan without sufficient papers. Mahfuj, a new client of South Bangla Agriculture and Commerce Bank, has been conducting handicraft business over the last 10 years.
He said he attended the fair to draw the attention of customers through his display of some new jute products.
Echoing Kalam, Mahfuj vented the same frustration over the banks’ reluctance to issue SME loans to new entrepreneurs.
Asked about banks’ disinterest in giving SME loans, NCC Bank Managing Director Golam Hafiz Ahmed said banks hardly have enough time to groom the new entrepreneurs for business.
He said banks run high risk as new entrepreneurs are not experienced with business culture, and so, they charge high interest from high risk business.
The banker also admitted that the financial institutions should come of the traditional method of sanctioning loan in case of SME.
In his address at the inaugural of fair at Sonargaon Hotel, Industry Ministry Secretary Musharraf Hossain Bhuiyan said new entrepreneurs face problem to access loan facilities for not having proper documents and caution money.
