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SDB Bank Partners with AfDB for Line of Credit for SMEs and Smallholder Tea Farmers Financial News

SDB Bank recently launched a joint initiative with the Asian Development Bank (AfDB) to provide Line of Credit (LoC) to selected Small and Medium Enterprises (SMEs) in Sri Lanka, including those run by women, are the first – borrowers on time, who lack sufficient collateral and those outside Colombo.

The project also includes technical assistance (TA) for the development of innovative financial programs for SMEs and the promotion of the development of export-oriented clusters and the development of an ecosystem for women’s entrepreneurship in Sri Lanka.

SDB Bank and AfDB are well known for their commitment to SMEs, export-oriented enterprises and women-owned and led businesses.

The AfDB is a key promoter of social and economic development in the Asia-Pacific region by providing loans, technical assistance, grants and equity investments, and is focused on its 2030 strategy to achieve a prosperous, inclusive, resilient and sustainable, while supporting its efforts to eradicate extreme poverty. While SDB Bank has spent the past 25 years supporting Sri Lanka’s SMEs and MSMEs in the development of its rural economy, the AfDB considers SDB Bank to be a key strategic partner in the region.

“Sri Lanka is on the edge of a precipice with an unforeseen economic crisis with shortage of energy and food security which is detrimental to the whole nation including SMEs which are not financially and operationally stable” , said Champa J. Dasanayake, Head of SMEs at SDB Bank.

“The AfDB SME Letter of Credit is a lifeline for local SMEs, especially those run by women, those that are not financially included and those located outside the urban areas of Colombo and are therefore exposed to economic vulnerabilities,” she added.

All types of SMEs are eligible to apply for the loan facility, with priority given to agricultural, agro-industrial, manufacturing, fishing, tourism, livestock and export-oriented businesses, excluding trading, leasing and rental. Among these, a special loan allowance is given to new borrowers, women-led businesses, business owners with unsecured working capital loans, and SMEs located outside the Colombo district.

The project also includes technical assistance (TA) to develop innovative financial systems for SMEs and promote the development of export-oriented clusters – an initiative funded by the Japan Fund for Poverty Alleviation (JFPR), which will contribute to augment the SDB bank’s existing technical assistance initiatives for SMEs and MSMEs.

In addition, the technical assistance will support the development of an ecosystem for female entrepreneurship in Sri Lanka, funded by the Women Entrepreneurs Finance Initiative (We-Fi).

The We-Fi grant can be applied for by qualified businesses, including SMEs requesting a minimum of Rs. 750,000 and a maximum of Rs. 30,000,000, and where women play a significant role in the business, whether either in the ownership, control, management or operations of the board of directors.

These sub-loans are granted for working capital, land purchase and construction, while trading, hiring, renting and leasing businesses are exempt.

The project further includes a refinancing loan program for smallholder tea farmers to encourage new planting and replanting activities, seen as a timely necessity to improve the sustainability of the tea industry. The loan program is provided to support capital investments in all types of projects that will increase leaf production through good agricultural practices such as planting, infilling, nursery development, irrigation, management of water and soil, etc.

Passionate about empowering women entrepreneurs, facilitating the digital inclusion of the country’s masses, and promoting sustainability both financially and environmentally, SDB Bank will actively roll out this SME project in partnership with AfDB in the coming months to uplift the nation by empowering deserving SMEs – the true drivers of the Sri Lankan economy.