Business Loan In Pakistan Government: Government of Pakistan offers business loans for entrepreneurs who want to start new businesses or want to expand their existing businesses, but lack the funds to do so.
Business Loan In Pakistan Government
The government has announced that it will be making available PKR 15 billion in small business loans that can be used by men and women all over the country.
These loans are meant to help small and medium-sized enterprises grow and improve their businesses, so it’s important that you learn how you can apply for them before they run out! Let’s take a look at what you need to know about these types of loans and how you can apply!
Business Loan Scheme 2022
Prime Minister Muhammad Nawaz Sharif has launched Business Loan Scheme under which more than five hundred thousands of people will be benefited. Total fund for Business Loan Scheme 2022 is one billion rupees and loan facility would be available to business entities in all over country.
Application form is now available at all bank branches, applicant can fill it and submit along with necessary documents to National Bank of Pakistan before March 31, 2017. Eligible applicants will get low interest rate loan up to Rs 500,000/- with maximum period of ten years . The scheme will enable prospective entrepreneurs to launch their own business ventures in a bid to alleviate poverty through self-employment opportunities.
NBP is offering attractive schemes to encourage entrepreneurship and create jobs in Pakistan. Under NBP’s Business Loan Scheme – 2017 eligible individuals can apply for loans ranging from Rs 50,000 to Rs 500,000 by submitting a duly filled application form along with supporting documents as mentioned below:
The Government of Pakistan has approved establishment of an Entrepreneurship Development Fund (EDF) that aims at providing venture capital funding support for new generation entrepreneurs.
So that they could start/grow their businesses on commercial lines by utilizing innovative ideas based on latest technologies. EDF shall provide financial assistance to those who have good business plans but do not have access to finance due to lack of collateral or equity base etc.
Business Loan Interest Rates
Interest rates for government loans will vary, depending on your category and the type of loan. They can go as low as 3% for women and 5% for everyone else. However, more often than not, interest rates will fall between 6-8%.
If you’re able to secure a fixed-rate loan from a private lender, be sure to have these terms written into your contract. Interest may fluctuate with market conditions, but with a fixed rate you can ensure that it won’t rise above an agreed upon amount.
And regardless of whether or not interest rates change over time (they most likely will), they don’t typically change during repayment unless it is negotiated in advance. This means you know exactly how much your monthly payments will be throughout the life of your loan.
Reasons why we should invest in Business Loan:
1) The small-scale sector accounts for more than 40 percent of employment, so promoting SMEs would also help reduce unemployment levels.
2) SMEs are credited with producing 60 percent of industrial output and 70 percent of exports through their participation in large value chains globally; however, they face challenges accessing financing due to high transaction costs relative to revenues and limited collateral.
By comparison, larger firms tend to have higher credit ratings, which reduces their cost of capital by providing access to international capital markets at lower spreads.
Eligibility Criteria
There are no eligibility criteria for these loan schemes. However, eligible entities will be required to submit relevant documents to the district coordination officer or any other authorized officer for verification. Loan amount can be availed for meeting working capital requirements and investment in production activities as well as self-employment including but not limited to purchase of machinery, equipment, furniture and fittings.
The term loan is provided up to a maximum period of 5 years with an installment repayment schedule over a maximum period up to 15 years which may be stretched to 20 years at 1% higher rate per annum at borrower’s request. Repayment shall commence from the end of last month of receipt of first tranche.
Repayment installments shall be equal monthly installments commencing from 31st day after receipt of first tranche. Government departments/agencies/parastatals/autonomous bodies etc., having their own treasury system are also eligible to avail these facilities through their respective treasuries subject to audit scrutiny by concerned audit authorities.
Application Process
Personal details including National Identity Card/Passport number, parents’ details, occupation & a recent photograph. If applying as a company then Articles of Association / Memorandum and Articles need to be submitted along with any necessary documents that accompany it.
As per Punjab Small Industries Development Board (PSIDB) 10% Non-refundable processing fee is to be paid at time of submission. Processing fee is deducted from loan amount should a loan application be approved after being reviewed by PSIDB’s credit department. The minimum loan amount is Rs. 50000/- while maximum loan limit stands at Rs. 3000000/- in case of individuals and Rs. 1500000/- in case of companies only for non-agricultural purposes.
Loan period ranges between 1 to 7 years. Maximum tenure is 15 years if used for agricultural purposes. Interest rate on government loan varies from 12% p.a. up to 18% p.a depending upon term of borrowing & purpose of use of funds while interest rates on private sector loans are much higher ranging between 20%-25%.
Documents Required
For applying for a loan under Government of Pakistan, you will need to provide at least some of these documents How much do I qualify for? You can apply with as little as Rs. 1 million or as much as Rs. 500 million. The maximum amount of credit that can be approved is Rs. 100 million per project and up to 75% of project cost (including machinery).
Interest rates: The interest rate on government loans is fixed at 2% above LIBOR + 1%. If you are paying off your loan early, there is no prepayment penalty. Repayment terms: Loans must be repaid within 5 years but may be extended if necessary (up to 10 years). Eligibility: All Pakistani companies are eligible for government-backed financing—no matter what industry they’re in or where they’re located—as long as they meet certain criteria.
In order to receive a loan from the Government of Pakistan, you must: Be registered in Pakistan. Have been operating for at least three years. Have assets worth at least Rs. 50 million ($400,000 USD). Have an annual turnover of at least Rs.
Business Loan In Pakistan Online Apply
The Government has launched a special scheme for self-employment to promote entrepreneurship in Pakistan. The scheme provides an opportunity to poor people and youth to start their own income generating projects. Under Business Loan Scheme, government will provide 30% subsidy on interest rate, 3 years repayment period with a moratorium period of 2 years.
In case of death or disability, loan amount can be passed on to spouse/offspring through inheritance or life insurance policy. Loans are being offered by National Bank of Pakistan (NBP) at reduced rates of interest as well as easy repayment schemes.
It is worth mentioning here that these schemes are also available at provincial level banks and commercial banks including HBL, MCB, United Bank Limited (UBL), Allied Bank Limited (ABL), Standard Chartered Bank (SCB), Habib Bank Limited (HBL), First Women Bank Limited (FWBL) etc. For further details contact NBP helpline: 0800-111-300 or visit nearest branch of any bank near you.
Prime Minister Loan Scheme
If you are interested in taking a loan from government then there is one such scheme that may be very interesting to you. This scheme has been launched by Prime Minister Nawaz Sharif himself. Under this scheme all those individuals who do not have any collateral security but want to start their own business can obtain loans from banks on easy terms and conditions.
Under Prime Minister Loan Scheme, an individual who applies for loan up to 1 million rupees will get 100% financing with an annual interest rate of 1%. However, for those entrepreneurs who want to take more than 1 million rupees as loan, then they will have to arrange 2% additional funding from either bank or other local financial institutions or any individual investors.
Prime Minister Youth Loan Scheme Details
For more information visit PMYLS Portal; Eligibility Criteria: This Loan is available to applicant who are pursuing graduation and post-graduation from any recognized university. Applicants must not have any outstanding loan from SBP or other financial institutions. Applicant must be a Pakistani Citizen in accordance with Article 4(1)(d) of SBP Ordinance, 1962 for working females and Article 4(1)(e) for non-working females.
Also Read: Business Loan In Pakistan Meezan Bank
Conclusion
Taking a loan from government is advantageous in many ways. First and foremost, they are reliable. For any business organization, regardless of its size, working capital is always important. The more it is, more profitable your company will be.
So instead of investing cash in your own pockets you can invest it in your projects or expansion plans to grow your company’s presence among other competitors in its sector. This way you make more money and create more jobs for people.
Government-sponsored loans have also low interest rates compared to commercial banks or financial institutions that tend to be very high when compared with government-backed lending options. The process involved may take slightly longer but its worth waiting if you really need cash immediately but don’t want to pay interest for years on end.
