PM Scraps 80% Export Rule for SME Loans in Big Relief for Small Exporters

Photo: Radio Pakistan

Small exporters in Pakistan just got a door opened that was shut to most of them. Prime Minister Shehbaz Sharif on Thursday scrapped the rule that a small business must earn 80% of its income from exports before it can get a long-term loan, and warned banks they will not be allowed to dodge the cheap-loan scheme for small firms and exporters.

The prime minister gave the order while chairing a high-level meeting in Islamabad on helping export-oriented small and medium enterprises, or SMEs. Until now, a small firm had to show that four-fifths of its revenue came from exports to qualify for long-term financing. That bar locked out thousands of businesses that export some of what they make but also sell at home.

"No bank will be allowed to deviate from implementing the concessional financing scheme for small and medium enterprises and exporters," the prime minister said, according to the Prime Minister's Office. He said the government will give all possible support to raise the capacity of small firms, improve their skills and grow their businesses, APP reported.

He also told officials to make life easier for exporters by improving accreditation standards, expanding laboratories and cutting red tape in regulatory procedures.

The meeting was told there are about 17,000 export-oriented SMEs in Pakistan, and that the State Bank's new portal for SME loans, launched on 1 November, has already received more than 10,000 applications. The government has set aside Rs300 billion under the Export Finance Scheme for the SME sector and new exporters, and Rs350 billion this year for the long-term financing facility, Business Recorder reported.

What this means for a small business owner is plain. If your factory exports part of its output, you no longer need to hit the 80% mark to ask a bank for a long-term loan at a low rate. You can apply through the State Bank's SME Connect portal and track the application yourself, instead of waiting on a bank manager's word.

The order comes with a warning that banks have heard before. Officials told a parliamentary committee this week that only about Rs5 billion of the Rs300 billion set aside for SME financing has actually been paid out so far, and that banks still ask small firms for heavy collateral even though the government wants lending based on cash flow. The prime minister's message on Thursday was aimed squarely at that gap between the money announced and the money reaching businesses.

The meeting was attended by Deputy Prime Minister Ishaq Dar, Finance Minister Muhammad Aurangzeb, Commerce Minister Jam Kamal Khan, Planning Minister Ahsan Iqbal, Industries Minister Rana Tanveer Hussain and other federal ministers, along with State Bank Governor Jameel Ahmad, Profit reported.

It follows a meeting on Monday in which the prime minister told the State Bank and the Federal Board of Revenue to sort out tax problems faced by SMEs and exporters. Lending to small businesses has already reached Rs1,148 billion, covering 342,458 firms, and the government wants that to hit Rs1,500 billion by the end of the 2026-27 financial year, Express Tribune reported.

The economy has been moving in the government's favour this week. Saudi Arabia rolled over Pakistan's $3 billion loan, the Economic Coordination Committee cleared Rs380 billion in grants for dams, defence and fertiliser gas, and the stock market crossed 175,000 points for the first time.

Sources

• Business Recorder: PM Shehbaz orders removal of 80% export condition for SMEs seeking long-term financing
• APP via UrduPoint: PM orders removal of 80% export requirement for SMEs seeking long-term loans
• Profit: PM orders easing of SME export financing requirements
• Radio Pakistan: Govt to extend all possible assistance to SMEs, PM
• Express Tribune: PM Shehbaz directs SBP, FBR to resolve tax issues faced by SMEs, exporters

Small exporters can now apply for long-term loans through the State Bank's SME Connect portal, and the government says banks that slow down the scheme will face action.

#SME #Pakistan #Economy #Exports #ShehbazSharif #SmallBusiness #Finance