Loan guarantee agency set up to help small businesspeople

To assist small-scale entrepreneurs obtain financing, the Bali administration is preparing to establish its own lending agency.

Bali Governor Made Mangku Pastika said Wednesday his administration had established a company to manage the fund, based on a newly enacted bylaw.

He said the administration is currently recruiting employees and setting up a board of commissioners for the company.

"We hope the company can commence operations by early next year," Pastika said.

The governor highlighted that the agency would be established to provide greater and easier access for small and medium enterprises (SMEs) to obtain credit.

According to the governor, many SMEs in the province had not yet formally registered, making it more difficult for them to obtain credit since legality was a main requirement.

Pastika also said the loans would only be provided based on an assessment of businesses that apply.

"Our requirements are not as complicated as those of banks. We also have low interest rates, so both the entrepreneurs and the agency are at an advantage," he said, adding he had confidence in the scheme.

The governor's assistant on financial and economic issues, Ketut Wija, said separately that for the initial phase, the administration had allocated Rp 50 billion from this year's provincial budget.

Wija also said the administration would cooperate with Bali Regional Development Bank (BPD) for the scheme, and would invite more banks in the future.

Each entrepreneur could propose a loan of up to Rp 500 billion in total. The amount of the approved loan would depend on the business' conditions, he said.

Wija said the new scheme was developed from the previous non-collateral credit scheme. He expected the agency would provide better credit management for SMEs, and allow for easy access to entrepreneurs as well.