'Risk share' to help small business

A NEW risk-share facility would give Papua New Guinea’s small business entrepreneurs access to funds through the microfinance expansion project (MEP).

Microfinance specialist Saliya Rangasinghe told The National that the creation of the new facility recognised the reluctance of banks to lend money to people wanting to set up a small business.

He explained that banks using this facility could get a 50% guarantee from the MEP on loans drawn by small businesses.

"We are introducing the facility where the banks can get the guarantees from us to give loans to micro and small businesses in this country. So if they give a loan, 50% of the loan will be covered under this facility," he said.

"We feel that banks are still really reluctant to give loans to these small people. We strongly believe that people are really good and they will repay but the banks don't believe that.

"The facility will be mainly be targeting the microfinance institutions such as micro banks and savings loan societies."

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