Small and middle-income businesses should be able to refinance loans provided to them, according to the parliament’s Committee on State-Owned Enterprises, which has proposed policy changes for SDFC, the SME Development Finance Corporation.
The Committee on State-Owned Enterprises stated in its report the importance of prioritizing sustainable businesses in issuing loans to SMEs via Banks, with the minimum financial burden.
The committee has decided to request Bank of Maldives and Maldives Islamic Bank to make the process of issuing loans more convenient for businesses that meet the criteria.
The committee also highlighted the current selection process for businesses eligible for the loans needs to include their performance pre and post COVID-19 pandemic.
As mentioned in the committee’s report, MVR 400 million will be issued as SME loans from the government’s budget in 2021 and there needs to be a good enough framework that will allow the disbursement of these loans to the businesses in most dire need of financial aid.
The report also stated that due to the present state of the Maldivian economy, SMEs need more support to develop sustainably, and that refinancing of loans should be available through SDFC.
The report further recommends Business Center Corporation (BCC) prepare a progress report every six months based on the establishment of an incubation facility for SMEs, which will involve providing SMEs with office space and other essentials to help them reduce overhead costs.
Moreover, the Privatization and Corporatization board must ensure that state-owned enterprises are implementing government policies to maximize the value of products and services sold by SMEs.
Furthermore, there should be a re-evaluation of the status of SMEs and to provide support for those businesses struggling to repay loans, to prevent their financial accounts from defaulting, and also banks to establish a guideline to restructure those loans.
Members of the Committee on State-Owned Enterprises voted unanimously in favor of expanding the support given to SMEs by various state-owned enterprises.