A-G to Sign Package, Micro, Small, and Medium Enterprises Benefit
Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum is expected to sign the Micro, Small, and Medium Enterprises (MSME) COVID-19 concessional finance support package today. The package will be made available from 7 June.
This is a step taken by Government to assist the micro and small businesses facing financial difficulties because of the coronavirus pandemic.
Basically, Government will be making funds available to these small and micro businesses with loans of 0.5 per cent to 1.5 per cent interest rate per annum, and repayments to start after one year of grace period.
All applications will be assessed by “Business Assistance Fiji”, which comprises accredited members of the Fiji Institute of Accountants, Fiji Commerce and Employers Federatio (FCEF), Fiji Chamber of Commerce and Industry, Women in Business and MSME Fiji.
Upon approval by the “Business Assistance Fiji”, Government will make direct disbursement in the bank account of approved entity. This is great news for women and small and medium enterprise owners.
This is a massive investment in the MSME sector by Government and a show of confidence in the sector, which has great potential.
Government will not earn any interest in the first year and if the MSME owners had tried to seek a loan from commercial banks, they would have ended up paying a much higher interest rate.
Why is this good news for women?
This is yet another step towards empowerment of women business owners in the country. You could be a newly unemployed chef, tailor, or a housewife who wants to venture out into business, this could be your opportunity.
MSME Credit Guarantee Scheme:
In 2012, Government established the MSME Credit Guarantee Scheme to help develop the local business industry, improve private sector lending by alleviating the requirement for high collateral and stimulate economic growth. Through a risk sharing arrangement, the Government initially guaranteed 50 per cent of the principal outstanding on defaulted SME loans up to a limit of $50,000 per business.
As at March 2020, 1711 small businesses with $104.6 million in outstanding loans were covered under the scheme.
The maximum interest rate that lending institutions could charge stood at 10.0 per cent per annum.
Changes to the Credit Guarantee Scheme:
Following a review of the Scheme to offer a number of financial lifelines for small businesses, and in recognition of the need for a targeted approach to support both women entrepreneurs and the primary sector, the Government is now increasing its guarantee on new MSME loans, with particular focus on uplifting those in these highly-impacted groups.
As part of the changes, Government will now guarantee to pay 60 per cent of the principal outstanding on defaulted small and medium business loans up to a limit of $60,000 per business.
In addition, to encourage women’s role in driving our economic recovery, and to support the development of the agriculture, fisheries and the forestry sectors, Government will guarantee to pay 75 per cent of the principal outstanding on defaulted loans up to a limit of $75,000 per business on all small business loans to women entrepreneurs, as well as loans to the agriculture, forestry and fisheries sectors.
Businesses with an annual turnover of up to $1.25 million will now be able to enjoy the credit guarantee compared with $500,000.
The Micro, Small and Medium Enterprises COVID-19 package will benefit many business affected by the pandemic. Pictured is a vendor and her family at the new Rakiraki market, which was opened by Prime Minister Voreqe Bainimarama on June 2, 2020.