Prime Minister's Youth Business Loan

According to the official website of the Small & Medium Enterprises Development Authority (SMEDA), the Prime Minister’s ‘Youth Business Loan’, for young entrepreneurs between the age group of 21 - 45 years, is designed to provide subsidised financing at 8.0% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd(FWBL). The small business loan with tenure up to 8 years, with first year grace period, and a debt : equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA). It has a 50% quota for women and 5% quota for families of Shaheeds, Widows and Disabled persons.

According to the official website of the National Bank of Pakistan (NBP), the small business loans will focus on (but will not be restricted to) unemployed youth, especially educated youth looking for establishing or extending business enterprises. Following are some of the salient features listed by NBP:

1. Eligibility criteria: All Men/Women holding CNIC, aged between 21 and 45 years with entrepreneurial potential to apply from designated branches mapped with area of residence/business.
2. Security Requirements: One Guarantor
3. Permissible Collaterals: Business hypothecation
4. Focus on women : 50% of loans will go to women borrowers.
5. Debt-Equity ratio: 90:10 - The borrowers’ contribution of equity would be in the form of cash or immovable property and will be required after approval of the loan.
6. Loan Period: The maximum tenor of the loan is 8 years, including one year's grace period
7. Pricing: 8% fixed of borrower. Government will pay the difference of the cost of KIBOR + 500 bps.
8. Number of loans: 100,000
9. Size of Loan: Upto Rs 2,000,000 (Twenty Lacs)
10. Allocation in budget 2013-14: Rs. 5 Billion

Note: For up-to-date policy concerning Youth Business Loans scheme, visit the official website of PMO, National Bank or First Women Bank.

Tags: Business, Economics, Pakistan, Trade, Banks, NBP, SMEDA, 2014

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