Home » Programs » Funding Schemes for SMEs » Youth Business Loan Policy

Youth Business Loan Policy

________________

Prime Minister Youth Business Loans

null

Small Businesses have potential to revitalize economic activity by creating employment opportunities, reducing poverty and providing economic linkages/services to the corporate sector. The growth of Small Businesses and their access to formal finance is imperative for development of economy. However, despite their strong potential, the small businesses particularly young entrepreneurs have traditionally remained credit constrained due to risk perception of banks towards these economic segments. On the other hand, the educated youth generally lacks entrepreneurial skills.The Government of Pakistan is cognizant of this scenario and is committed towards uplifting the youth and providing them opportunities of financial independence through self employment. With this objective, the Government has introduced Prime Minister’s Youth Business Loans scheme with a mark-up subsidy and partial guarantee facility for extension of small business loans upto Rs. 2,000,000

1  Brief Description Small Business Loans will focus on (but will not be restricted to) unemployed youth, especially educated youth looking for establishing or extending business enterprises
2  Eligibility Criteria All men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential to apply from designated branches mapped with area of residence/business.
3  Security Requirements One guarantor
4  Permissible Collaterals Business hypothecation
5  Focus on Women 50% of loans will go to women borrowers
6  Debt-Equity Ratio 90:10
The borrower’s contribution of equity would be in the form of cash or immovable property and will be required after approval of the loan.
7  Loan Period Tenor of loan upto 7 years with six (6) months grace period.
8  Pricing 8% fixed for borrower. Government will pay the difference of the cost at KIBOR+500bps
9  Risk Mitigation Government will bear upto 5% losses on the portfolio of the bank under this scheme
10  Number of Loans 100,000
11  Size of Loan Upto Rs 2,000,000 (Twenty Lacs)
12  Allocation in Budget 2013-14 Rs. 5 billion
13  Executing Agency In the first instance, National Bank of Pakistan (NBP) and First Women Bank Limited (FWBL) under the guidance and supervision of State Bank of Pakistan. SBP to ensure participation of private banks:
a) Private banks will be required to participate in this scheme on the basis of soundness of business proposals; and
b) SBP will encourage private banks to build this portfolio commensurate with their size.
c) SBP will arrange appropriate training for private banks to implement this scheme.
d) NBP will continue to play the lead role.
14 Sectors and Products All sectors. Standardized schemes/ projects/ undertakings will be designed by SMEDA, projects designed by private sector service providers or by individuals themselves will also be admissible.

Role of SMEDA:

a) The 50 feasibilities prepared and uploaded by SMEDA will be extensively publicized and their access to public made easier through multiple linkages with other relevant websites.
b) SMEDA will work closely with Punjab Information Technology Board (PITB) to ensure that the schemes are accessible to those who participated in the PITB survey.

15  Application Form The Form would be both in English and Urdu; and require minimum essential information with simple format.
The processing time will not exceed 15 days and will be so stated clearly in the application form; and
The forms would be readily available both in branches and through dedicated websites of the banks.
Non-refundable form processing fee will be Rs. 100 (One Hundred).
16  Monitoring SBP will publish consolidated information about the loans extended under this scheme for information of the public on quarterly basis on its website;
An effective Complaint Center to process and resolve complaints will be set up;
E-government directorate of Ministry of IT will provide support
17  Geographical distribution Whole of Pakistan. In case of Balochistan, at least one branch of NBP will be designated per Division.
All non-designated NBP branches will also provide and receive filled application forms and dispatch them to the nearest branches.

 

S.no Title Downloads
1 Youth Business Loans Website
2 Brochure for Prime Minister Youth Business Loans Download