To support the government’s policy of reviving and growing the tourism sector, the Credit Guarantee Corporation of Cambodia (CGCC) launched the Co-financing Guarantee Program for Tourism (CFGS-TR) after the approval of the Ministry of Economy and Finance.
The CFGS-TR is specifically designed to provide credit guarantees on co-financing loans disbursed by CGCC Participating Financial Institutions (PFIs) under the SME Bank’s Tourism Recovery Co-financing Program (TRCS) from Cambodia.
This is a joint effort of the two public companies to improve access to financing for SMEs in the tourism sector. While the TRCS aims to reduce the cost of borrowing for SMEs, the CFGS-TR is a guarantee system that will serve as collateral/guarantee for 80% of the loan amount; thus reducing the physical collateral required from borrowers.
The CFGS-TR will support new loan disbursements in the SME banking sector. During this time, PFIs will be able to offer higher lending and risk exposure will be shared with CGCC up to 80%.
According to a press release, the Co-financing Guarantee Scheme – Tourism is a sub-credit guarantee scheme under the co-financing guarantee scheme offered by CGCC to participating financial institutions on loans lent under the co-financing schemes. co-financing for the revival of tourism for SMEs Bank of Cambodia.
Hong Vannak, an economics researcher at the Royal Academy of Cambodia, said that granting and receiving a loan with legal guarantees has played an important role in the growth of the economy, especially in the crisis caused by Covid-19.
When the financial sector is stable, there is a lot of investment and job creation. On the other hand, when small and medium enterprises have sufficient capital, it also helps to increase production processes and reduce imports and increase exports, he added.
He further said that providing credit guarantees has helped both lenders and borrowers to trust each other because before daring to guarantee, CGCC always has conditions and studies the business first.