Best government schemes for small business loans
Starting and growing a small business in Pakistan can be challenging, especially when it comes to securing financing. Fortunately, the government offers several schemes to support small and medium-sized enterprises (SMEs). This article provides an overview of the best government schemes for small business loans in Pakistan, detailing their features, eligibility criteria, and application processes.
Prime Minister’s Youth Business & Agriculture Loan Scheme
The Prime Minister’s Youth Business & Agriculture Loan Scheme aims to provide subsidized loans to young entrepreneurs and farmers. It offers both short-term and long-term financing options to meet diverse business needs.
Key Features:
- Loan Amount: Divided into three tiers:
- Tier 1: Up to PKR 0.5 million
- Tier 2: Above PKR 0.5 million and up to PKR 1.5 million
- Tier 3: Above PKR 1.5 million and up to PKR 7.5 million
- Interest Rates: 5% for Tier 2 and 7% for Tier 3
- Equity Contribution: 10% for Tier 2 and 20% for Tier 3
- Repayment Period: Up to 8 years, with a grace period of up to 1 year
Eligibility Criteria:
- Pakistani citizens aged between 21 and 45 years
- For IT and e-commerce businesses, the minimum age is 18 years
- Applicable to both startups and existing businesses
How to Apply:
Interested individuals can apply online through the official portal:
SME Asaan Finance (SAAF) Scheme
The SME Asaan Finance (SAAF) Scheme is designed to simplify access to finance for SMEs, particularly new borrowers. It offers both term loans and working capital facilities.
Key Features:
- Maximum Loan Amount: Up to PKR 10 million
- Interest Rate: Up to 9% per annum
- Risk Coverage: Government provides risk coverage ranging from 30% to 50% on a first-loss portfolio basis
Eligibility Criteria:
- All SMEs, including new and existing businesses
- Must be new borrowers of the participating banks
How to Apply:
Applications can be submitted through participating banks. For detailed information, visit the State Bank of Pakistan’s official page:
Credit Guarantee Scheme for Small and Rural Enterprises
This scheme aims to facilitate financing for small and rural enterprises by providing credit guarantees to banks and financial institutions.
Key Features:
- Risk Coverage: Up to 60% for startups, women borrowers, and enterprises in underserved areas
- Maximum Loan Tenure: Up to 5 years
- Maximum Loan Amount: As per the State Bank of Pakistan’s prudential regulations for small enterprises
Eligibility Criteria:
- Micro and small enterprises, including farmers
- Enterprises operating in underserved areas are given preference
How to Apply:
Interested applicants should approach participating banks. More details are available on the National Bank of Pakistan’s website:
Akhuwat Islamic Microfinance
The Akhuwat Foundation offers interest-free microloans to support small businesses and alleviate poverty.
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Key Features:
- Loan Amount: Ranges from PKR 10,000 to PKR 50,000
- Interest Rate: 0% (interest-free)
- Repayment Period: Flexible, based on the business plan
Eligibility Criteria:
- Individuals from low-income households
- Must have a viable business idea
How to Apply:
Applications can be submitted at Akhuwat centers across Pakistan. For more information, visit:
CM Punjab Asaan Karobar Finance Scheme
Launched by the Punjab government, this scheme provides interest-free loans to promote small and medium enterprises in the province.
Key Features:
- Loan Amount: From PKR 0.5 million to PKR 3 million
- Interest Rate: 0% (interest-free)
- Repayment Period: Easy installments, as per the loan agreement
Eligibility Criteria:
- Residents of Punjab province
- Must have a viable business plan
How to Apply:
Applications can be submitted online. For assistance, contact the helpline at 1786.
These government schemes play a crucial role in supporting small businesses in Pakistan by providing accessible financing options. Entrepreneurs are encouraged to explore these opportunities to establish and expand their ventures, contributing to economic growth and job creation in the country.