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Faster SME loans the PGA way

[ 16-04-2009 ]

Small companies can now get loans much faster under a new deal between banks and Credit Guarantee Corp Malaysia Bhd (CGC).

Standard Chartered Bank Malaysia Bhd (StanChart Malaysia), for instance, the first lender to sign with CGC, will process loans in one to three days compared to the normal processing time of two weeks.

This is made possible because the borrower does not have to go to the CGC to ask for guarantee, which is the practise for existing schemes currently. Now, a borrower will just go to the bank, which will do the credit assessment for CGC.

StanChart Malaysia expects to give out RM300 million under the Portfolio Guarantee Agreement (PGA), but this will be done in stages.

The target of StanChart Malaysia's term-loan facility is companies with annual sales turnover of between RM5 million and RM25 million.

Chief executive officer Julian Wynter said the PGA offers a loan ranging between RM100,000 and RM500,000 to small and medium enterprises (SMEs) for their working capital needs.

"We have committed RM50 million for the SMEs in the first tranche and eventually up to RM300 million in subsequent tranches," he said at the signing ceremony in Kuala Lumpur yesterday.

Also present were Bank Negara deputy governor and CGC chairman Datuk Zamani Abdul Ghani, CGC managing director Datuk Wan Azhar Wan Ahmad and former Affin Bank Bhd managing director Datuk Seri Abdul Hamidy Abdul Hafiz.

StanChart Malaysia, the first bank to sign a PGA with the CGC, aims to double SME loans to RM6 billion in three years.

Wynter said in the first quarter of this year, the bank's SME loans grew 32 per cent from the fourth quarter. It anticipates overall loan growth to rise by up to a tenth this year.

Bad loans make up 2 per cent of its total, but the bank does not expect this to rise this year.

CGC, the sole provider of loan guarantee for SMEs, is currently in talks with several banks, including foreign banks, on the PGA.

"We expect one or two more banks (to sign the PGA with CGC) this year," Wan Azhar said.

CGC wants to guarantee up to RM4 billion SME loans this year, including some RM1 billion loans from new schemes introduced by the central bank.

CGC, which is 79.3 per cent owned by Bank Negara, guaranteed RM3 billion loans in 2008 and RM4.6 billion in 2007.

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/7KECIK/Article/index_html