Accounts must be in order for SMEs to qualify for loans

The lack of proper accounts, financial statements and a solid business plan is one of the biggest obstacles to small and medium enterprises (SMEs) qualifying for loans, banking officials said at a recent discussion on access to capital organised by MFITRIX, a financial training school.

“When obtaining loans, the banks need to review each applicant’s income and expenditure to calculate the repayment terms,” said Dr Hla Nyunt, deputy managing director of Global Treasure Bank.

“Local firms are weak in basic accounting processes such as keeping track revenue, expenditure and tax. In addition, their business plans and strategies are not recorded or well-prepared. Without these documents, it is quite impossible for the banks to extend loans to them,” Ayeyarwady Bank managing director U Myint Zaw said.

The government has taken efforts to help local SMEs sidestep high local interest rates and collateral requirements with options such as foreign loans and insurance.

A much-anticipated credit bureau is also expected to be granted a license to operate soon, which will loan access easier for firms with their books and plans in order, said Daw Khin Thida Maw, manager of International Finance Corporation (IFC) for Myanmar. IFC is cooperating with theCentral Bank of Myanmar to develop the financial sector. So far though, only few have managed to qualify for loans due to the lack of documentation.

Despite Myanmar Insurance introducing a credit guarantee insurance system in 2016, there have only been 300 new businesses which qualified for loans during the period, SME Development Department Director General Daw Aye Aye Win said.

In fact, there have been instances in the past where applicants have modified their accounts in attempts to qualify. “Upon our checks and audits, these firms have been found guilty of fraud, making it impossible for them to obtain loans in the future,” said U Thaung Han, managing director of CB Insurance and CB Securities.

Therefore, local businesses should prepare transparent accounts and draw up a 2-3 year business plan with correct disclosure of assets for easy access to capital, former Deputy Minister for Planning and Finance Dr. Maung Maung Thein said.

Source : Myanmar Times

To see the original article click link here

NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, “Puma Energy”, “MOGE”, “yangon new town”,”MECTEL”, “hydropower”, etc.

.

To evaluate the various segments of the market that you could possibly enter base on your competencies you can do a Custom Market Entry Strategy Research. You can see a sample report at page “Actual Sample of Client Report”. Click here to go to page.

.

Do you know that IE Singapore is giving ≤ SGD 20, 000 support under the MRA Grant and > SGD 20,000 under the GCP Grant for Singapore companies to venture into Myanmar? To learn more click here.

.

If you have Request for Quotation (RFQ) or Tender Announcement that you want us to publish for FREE in the Tenders & Awards section of our website please submit to us at tender(at)consult-myanmar.com for our consideration.


Looking for foreign investors to invest in your business in Myanmar
Looking for Professional Cleaning Services