CMSME
Out of 7.8 million enterprises in Bangladesh, 88% (6.86 million) are cottage enterprises that employ 13.16 million people. A further 11% micro enterprises create employment of 0.56 million. CMSMEs together represent 99.84% of the total enterprises in the country. Almost 80 per cent of the total employment in the industrial sector comes from CMSMEs making nearly 45-per cent value addition to the manufacturing sector. In aggregate, SMEs contribute to 25% of Bangladeshi GDP, as of 2018 it stands at 79 billion USD.
However, despite the significant contribution to Bangladesh economy, borrowing from the formal banking channel has been difficult for small enterprises, specifically which are located in rural areas, due to unclear definition, lack of required documents and deficient bank-client relationships. Even the complicated disbursement process, absence of bank account, and minimal scope of collateral have been creating barriers CMSMEs to obtain loans.
Zaytoon Business Solutions wants to make the loan products more accessible to rural CMSMEs through the “Village Digital Booth”.
The loan products will be offered in the following modes:
- Agricultural Loan: It is a loan product for all kinds of agro-based and agro-processing industries available to CMSMEs and other special organizations engaged in the field.
- Small Business Loan: The loan fulfills the working capital requirement of CMSMEs.
- Revolving Short Term Loan Facility: Any Small and Medium Enterprises (SME), whether it is manufacturing, service, trading or farming can avail this facility for working capital for payment of local procurement of inventory / raw materials and to meet any kind of short-term urgent fund requirement.
- Commercial Space Finance: A term loan product for Small and Medium Enterprise customers who want to purchase, renovate or develop/construct commercial space.
- Loan for CMSMEs for fixed capital investments: This will allow them to purchase Machinery, equipment, Furniture, vehicles, etc. for commercial uses.
The Critical Role of CMSMEs in Bangladesh’s Economy
Of the 7.8 million enterprises in Bangladesh, a staggering 88% (6.86 million) are cottage enterprises, employing a workforce of 13.16 million people. Additionally, 11% of enterprises are micro enterprises, generating employment for 0.56 million individuals. Together, CMSMEs represent a substantial 99.84% of the total enterprises in the country.
CMSMEs play a vital role in the industrial sector, contributing to nearly 80% of the total employment and approximately 45% of the value added to manufacturing. In aggregate, SMEs contribute to 25% of Bangladesh’s GDP, reaching US$79 billion as of 2018.
Challenges Faced by CMSMEs in Accessing Loans
Despite their significant contribution to the Bangladeshi economy, small enterprises, particularly those located in rural areas, have faced difficulties in obtaining loans from formal banking channels. Unclear definitions, lack of required documentation, and deficient bank-client relationships have hindered their access to credit. Complicated disbursement processes, the absence of bank accounts, and limited collateral options have further exacerbated these challenges for CMSMEs.
Zaytoon Business Solutions’ Solution: Accessible Loans for Rural CMSMEs
Zaytoon Business Solutions aims to address these challenges by making loan products more accessible to rural CMSMEs through its Village Digital Booths. The following loan products will be offered:
- Agricultural Loan: This loan is designed for all types of agro-based and agro-processing industries, catering to the needs of CMSMEs and other specialized organizations engaged in the agricultural sector.
- Small Business Loan: This loan addresses the working capital requirements of CMSMEs.
- Revolving Short-Term Loan Facility: This facility is available to any SME, regardless of its industry (manufacturing, service, trading, or farming), to support working capital needs for local procurement of inventory or raw materials and to meet urgent short-term funding requirements.
- Commercial Space Finance: This term loan product is intended for SME customers seeking to purchase, renovate, or develop commercial space.
- Loans for Fixed Capital Investments: This loan enables CMSMEs to purchase machinery, equipment, furniture, vehicles, or other assets for commercial use.
By offering these tailored loan products, Zaytoon Business Solutions seeks to empower rural CMSMEs and contribute to their growth and development.