Introduction

This product offers financial assistance for Micro, Small & Medium Enterprises to achieve their growth potential. This facility has been made available to Banks by the CBSL Monetary Law Act order No 02 of 2021 to provide financial solutions in line with the current market trends.

Purpose

This product has been designed to finance individual and corporate entrepreneurs (who have been in business for a minimum of one year) to continue or improve their businesses.

Eligibility

• Individuals, Sole Proprietors, Partnerships and Private Limited Liability Companies who are presently engaged in industrial, agricultural, including below stated sectors /sub sectors.
• an applicant should be age over 18 years and be eligible to enter into an agreement with the bank and be the owner of business and have a business place of his/her own or in a rented-out/lease premises.
• New business/project start-ups or diversification proposals are eligible to apply for financing when proposed start-up business is a fully owned subsidiary of an existing Group owned by same shareholders or manage by the same directors. Group entity should be in operation for a minimum of three-years.

Sectors and sub sectors

The following sectors have been identified for future lending procedure of the Bank and it would be covered all the types of business lending.

Exposure limit for sectors and sub sectors will be decided by ECC subject to Central Bank guide line.

Eligible Activities

Credit Facilities will be entertained for the following purposes within the sectors/ sub sectors mentioned above.

• Term loan for creation of fixed assets / project finance.
  • Constructions of buildings and related structures for specific projects.
  • Purchase of fixed assets ( Plant and machinery, Equipment etc)
  • Purchase of vehicles for agriculture/ industrial /project purpose.
• Working Capital financing (Permanent working Capital / Regular working Capital)
• Redemption of credit facilities obtained for eligible activities stated under subsection 1.4.1.a and 1.4.1.b are allowed. Purpose of the original loan/facility should be confirmed by providing supporting documents to the Bank.

Credit Facilities will not be entertained for the following:

• Minors or partnerships where the controlling interest is held by a minor.
• Speculative business.
• Immoral/ illegal purposes.
• Any business detrimental to society.
• Any business that is not environment friendly.
• Any prohibition under the Central Bank of Sri Lanka.

Loan Amount and Exposure Limit

Maximum direct and indirect exposure for business development to a single client should be no more than to Rs.50.0Mn. Total group exposure should be limited to Rs.100.0Mn. Facilities above the limit could be accommodated subject to approval of the Board of Directors.

Maximum Exposure to a Project

Maximum amount should be 75% of the total project and the balance 25% of the Project should be financed through personal funds. (this could include existing and new investments). The said exposure limit will not be applicable for working capital finance.

Repayment period

Maximum repayment period of the loan is 5 Years. Grace period is 0-6 months.
However, repayment period and grace period is not granted automatically and will be at the discretion of the management, considering the projected cash flow. Interest for the grace period should be paid during the grace period by the borrower on a monthly basis.  Any deviations should be referred to the ECC.

Mode of Repayment

Installments should be paid by the borrower to settle the loan capital and interest through their savings account at SMIB during the loan tenure. Installment type can be designed as per the nature Cash flow of project/business.

• Equal monthly installments (EMI)
• Bullet re-payments
• Quarterly Installments (Equated/Equal)
• Semi-annual installments (Equated/Equal)
• Interest pay monthly and capital repay at the end of tenure/ at specific period.

As an example, mode of repayment can be decided as per the nature of cash flow such as EMI/Quarter/Semiannual installments might be applied for Agriculture, manufacturing, construction, purchase of fixed assets, working capital facilities and etc. Bullet re-payments might be applied for property development facilities, order specific financing and etc., where interest is service monthly and capital repayment at the end of tenure/specific period, based on the cash flow derived from the project/order.

Conditions apply

For more information visit our nearest SMIB Branch or Contact Us via our Call Centre on 1922