September 25, 2022
SME loan

Looking for SME loans for your business? But don’t know whether you are eligible or not? Or wondering how do I apply for the SME loan. Then this article will help you.

SME banking helps Small and medium enterprises avail loans at a lower interest rate for their business operation. Below is the process of applying for an SME loan in Bangladesh.

What is SME Lo2an?

It’s a loan that financial institutions offer to small and medium-sized businesses. Financial firms make loans to small and medium-sized enterprises for working cash, company development, and capital machinery acquisition.

For the first time in 2010, banks and financial institutions established a total target of SME credit of Tk. 23,995crore, recognizing SME growth as an essential development objective for the country.

The SME and Special Programme Division has implemented various programs, schemes, and policy measures to support the growth and expansion of small and medium-sized businesses.

Who is eligible to take the SME loan?

According to the aim, small, medium, and women entrepreneurs will be eligible for SME loans. 

Any solo proprietorship, partnership, or limited company that has operated successfully in the same business area for at least 5 years is eligible to take the SME loans. 

For a loan up to BDT 2 Crore, you must have worked in the same field of business for at least three years.

On the other hand, a minimum of four years of experience is necessary for loans exceeding BDT 2 Crore.

Documents needed to apply for an SME loan

  1. Client-signed loan application
  2. CIB report 
  3. Trade license (up to date)
  4. TIN certificate (if the loan amount exceeds Tk.500,000/-)
  5. Approval of the terms and conditions of the sanction advice before disbursement
  6. Financial statement audit report (if total exposure exceeds Tk.4,000,000/-)
  7. Estimated project/construction cost from competent authorities for a commercial complex.
  8. Land-related paperwork 
  9. No objection certificate/mortgage authorization from MoWorks / RAJUK/Cantonment Board or, in the case of leasehold property, from the competent authorities.
  10. Certified copy of irrevocable general power of attorney to sell the mortgaged property without court involvement, with legally attested deed delivery receipt.

What is the interest rate on SME Credit?

Banks/financial institutions must set the interest rate on small and medium-sized loans for each sector/sub-sector. Banks’ operational costs are prohibitively expensive for small business owners. The interest rate in this industry is understandably greater, and banks are being directed to keep interest rates within a reasonable range.

Bangladesh Bank offers banks and financial institutions refinancing at bank rates (currently 5%) in the SME sector. The funds collected through the BB refinancing window shall be distributed to the client at bank rates plus no more than 5% interest (in the case of women entrepreneurs).

Benefits of SME loan for Women Entrepreneurs

Banks and financial institutions have established an estimated target for SME loan disbursement.

SME loans must be made following the aim of distribution to small, medium, and female enterprises.

  1. At least 15% of the total BB refinancing money for the SME sector has been allotted to women entrepreneurs to organize and make consistent industrial growth and secure institutional credit facilities.
  2. The interest rate for female entrepreneurs will be the bank rate (currently 5%) plus a maximum of 5%, that is, no more than 10% yearly.
  3. Banks/Financial Institutions would accept and pay all forms of SME women loan applications.
  4. Priority is given to entrepreneurs
  5. Banks and financial institutions must take the initiative to publicize all services available to women.
  6. Entrepreneurs working in both internet and print media
  7. Banks and financial institutions may offer a maximum loan facility of Tk.25,000/- against a personal guarantee if the borrower is a woman or the majority of the enterprise’s owners are women
  8. Banks and financial institutions must set up a specific advice and service center for women
  9. Enterprises in certain fields and provide a service-oriented approach to women entrepreneurs.


The SME banking market has changed dramatically during the last few decades. The primary function is not restricted to lending money and accepting deposits, as the scope has expanded significantly.

Hope this write-up helps you understand SME banking properly and give you an adequate idea about the Bangladeshi SME sector.

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