BE THE MASTER OF YOUR OWN FATE & SUPPORT US IN DEVELOPING AN ECONOMICALLY SUPERIOR PAKISTAN

Resourse Assistance:

The center facilitates young entrepreneurs in conducting initial studies to develop their raw concepts into “valid entrepreneurial” ideas. It will help them with developing feasibility studies, arranging financial, human, and social resources. It also plans to provide initial office facilities so as to embark upon their entrepreneurial ventures.

The center will facilitate entrepreneurs in conducting initial studies to develop their raw concepts into “valid entrepreneurial” ideas. It will help them with:

• Developing feasibility studies.
• Conducting surveys for market research.
• Arranging financial resources.
• Providing initial office facilities so as to embark upon their entrepreneurial ventures.

First Steps

To start a business, search the market and explore the opportunity to start the business so as to identify the strengths and weaknesses of the area in which business will start.

Feasibility studies:

The potential entrepreneurs will be provided with the assistance of developing feasibility studies. A good feasibility report covers the following areas.

1. What are the reasons to go for a business? These can be:
   • Self-management
   • Financial independence
   • Financial independence
   • Creative freedom
   • Full use of personal skills and knowledge
2. Identify the most suitable business for you.
   • What would I like to do with my time?
   • What technical skills have I learned or developed?
   • What do others say I am good at?
   • Will I have the support of my family?
   • How much time do I have to run a successful business?
   • Do I have any hobbies or interests that are marketable?
3. Identify your target market. Research and answer these questions:
   • What services or products will I sell?
   • Is my idea practical, and will it fill a need?
   • What is my competition?
   • What is my business's advantage over existing firms?
   • Can I deliver a better quality service?
   • Can I create a demand for my business?
4. Before starting the business you must be clear on the following.
   • What skills and experience do I bring to the business?
   • What legal structure will I use?
   • How will my company's business records be maintained?
   • What insurance coverage will be needed?
   • What equipment or supplies will I need?
   • How will I compensate myself?
   • What are my resources?
   • What financing will I need?
   • Where will my business be located?
   • What will I name my business?

This will help you in doing your homework for your business and will reduce the risk involved in it.

Entrepreneurship financing

An entrepreneur must be keen of deciding how to finance the business. It should be kept in mind what particular financing benefit the business and you can use in a best possible manner so as to maximize your turnover.

Sources of financing:

There are two types of financing: equity and debt financing. While deciding if you have more ratio of debt to equity, it is advised that you finance your projects through equity financing and increase your equity. But if you have a less ratio of debt to equity you can go for debt financing as well. Being an entrepreneur it is a very crucial decision to choose between these two types of financing.

 Equity Financing:

You can finance your business through non debt means such as friends, relatives, family. This encourages you to feel less tension as compared to debt financing which will keep you worried about the repayment of debt.

 Debt Financing:

Many sources are available in debt financing like banks, financial institutions including the micro finance sector from where you can generate finance for your business ideas. The financial institutions of Pakistan that support small and medium enterprises are;

1. SME Bank.
2. Microfinance Banks
3. Kashf Bank
4. Rozgar Microfinance Bank Limited
5. Pak Oman Microfinance Bank Limited

SME Bank

SME Bank was established to address the financing and business support requirements of SMEs. It is Pakistan’s premiere SME lending institution with its network in SME concentrated areas such as Sialkot, Gujranwala, Multan, Sukkur, Hyderabad, Mirpur, D. I. Khan, Gilgit, etc. Providing financial assistance and business support services to small and medium entrepreneurs form its core activities. SME Bank can provide financial assistance from Rs.50, 000. Up to an amount of Rs.30 Million. It is mandatory for the borrower to meet the debt: equity ratio of at least 60:40 Security may vary from project to project. In most cases, it is mortgage of urban property along with personal guarantees.

Application process

1. Fill up SME Bank’s loan application form
2. Attach the required documents
3. Submit the above to our designated branches

Documents to be attached

1. Complete a business plan of the project/enterprise.
2. Attested Copy of National ID Card.
3. Bank Statement.
4. Attested copies of property documents.
5. Additional documents may also be required by SME Bank, depending upon the project/enterprise.

After the applicant has provided the requested information along with attested documents, the process takes around 45 days. Delays are usually due to inadequate information provided by the borrower.

1. Kashaf Bank

General Loans

The GL focuses on building and sustaining economic opportunities of poor households and thus achieving Kashf’s over-arching goal of alleviating poverty. The GL is based on group collateral where a group of 25 women jointly insure each other against default. In light of KASHF's strong commitment to customer care, center members have to wait only 7 days after their registration to get the first loan, while repeat clients can obtain a loan within 24 hours. The loans are advanced to female members of the household and it is the mutual decision of the household to decide on the economic activity that they will invest in.

Business Surmaya Loan

Clients requiring loans below Rs 500,000 cannot obtain access to formal financial sources, since such amounts are still too small for commercial banks. A quick estimate can show that the potential market for small enterprises is about 6 million with a negligible outreach to such entrepreneurs by the banking and the microfinance sector as a whole. Kashf targets fast moving small entrepreneurs through the BSL, the entire methodology of which is based on a credit scoring model. The BSL is advanced to clients with a minimum of 2 years running experience of their businesses and has no collateral requirements. Generally the loan has a minimum processing time of less than 5 days.

Age of the clients:

For the first loan cycle: 25-58 years is the requirement (at the time of sanction of the loan) for the second loan cycle: 25-60 years is the requirement (at the time of sanction of the loan). Age of the Guarantor: Age of the guarantor: 25-65 years is the requirement (at the time of sanction of the loan) Business: It should be an operational business owned by the client. Type of Activity: Trade, production, services or livestock rising Experience: At least 2 years of experience in the same business. Business Location: Business operating in the same location for at least 1 year.

2. Rozgar Microfinance Bank Limited

Introduction of Bank

Rozgar Microfinance Bank provides loans on small levels to males and females who permanently reside in Karachi. This Bank was established in 2004. The purpose of this bank is to give financial protection to those men & women who conduct their own businesses but due to financial hardship, they could not develop their businesses. The bank helps them to expand their businesses and to increase their income as well.

The Main Features of Loan

1. The loans are granted on individual or group basis. The group consists of minimum 3 and up to 5 persons and must not be blood relatives. They are mutual co guarantors to each other and live in the same locality.
2. The loan amount is fixed after assessment of the income of the current business. This procedure has been adopted for their ease and to avoid extra burden upon them, enabling them to repay the loan easily.
3. The loan period shall be 3 to 36 months
4. Markup 18 % p.a. (flat)

Important Conditions of the Loan

• One should have a valid CNIC.
• His/her age should be between 28 to 58 years.
• He/she is running the business over the last two years at the same fixed location.
• He/she should have the relative skills /capability and having 2 years experience.
• He/she should not have been unemployed for more than six months at the time of applying for the loan.
• His/her current annually income should not be more than Rs. 150,000/-
• If he/she has taken loans from Government / Semi Government or Financial Institutions, the value of the loan should not exceed Rs. 150,000/-.
• If the residential place is far from the work place then the distance should not be more than 10 kilometers.

The Rozgar Microfinance Bank also provides the following financial services to businesses/professions:-

The loan for Purchasing the Articles

The loans are granted for the purchase of goods such as sewing machines, deep freezers, parts of machines, motors, and tools purchasing. The Rozgar Bank helps to purchase the requisite items on lower costs, which allows extra funds to be utilized for further profits.

Daily Business Capital

This loan provides the purchase of raw materials for running business and other necessities by which applicants can increase production.

Benefits to Take Loan from Rozgar

• The loan is provided without pledging the assets.
• The strong system of Rozgar Bank provides services at the door step.
• Very low profit percentage.
• Prompt loan processing.
• On better re-payment of loan amount, the bank can increase the loan amount for next time.
• Positive and quick processing of repeat loans on better re- payment of loan amount.

3. Pak Oman Microfinance Bank

Group Lending

1. Micro Business Loan (MBL):

MBL are to be extended to individuals to manage their existing businesses. These loans are not designed to finance the establishment of new activity. Skilled and specialist craftsmen with reasonable experience in their respective fields will be granted these loans to smoothen and enhance their income patterns and generate business activity through purchase of raw materials and stocks to enhance production of goods and services to meet the loan demand.

2. Micro Agri Loan (MAG):

These loans are designed for small farmers who require agriculture inputs including seeds, fertilizers, pesticides, irrigation water, or rental of agriculture equipment and transportation services.

3. Micro Assets Loan (MAL):

Under this product category, the customers may purchase movable engines, parts, machines/motors, tools (including agriculture related tools), equipment etc. the identified assets should be employed in the individual’s income generating activities and commensurate with the acquired professional skills and experience.

4. Livestock Loan (LSL):

The applicant with this loan may purchase livestock and other animals to yield enhanced income. Small-scale animal’s husbandry generally acts as a primary source of savings and can be pursued either to supplement income or independently as the main source of income more frequently in highly marginalized areas.

5. New Micro Business Loan (NMBL):

NMBL will be extended to those individuals who are interested in starting up or establishing new business activities or for managing a running businesses for income generating purposes only and not for personal consumption purposes. The business activity proposed by the applicant to be financed under this category must reflect:

• Daily cash flows
• Required a low technical know-how or management skills
• Any experience held by the applicant can be considered as an added advantage but it will not be mandatory

A loan application under this loan category will not be subjected to cash flow analysis and will be exempt from other requirements. However, subsequent loans by the same individual will be subjected to standard evaluation and assessment criteria assess individual’s credit worthiness.

Individual Lending

1. Micro Enterprise Loan (MEL):

The purpose of this loan is to enhance the ongoing micro enterprise. MEL will be extended to individuals / credit worthy clients after screening their cases through a comprehensive, well defined process, preferably to those who have already availed a loan from the bank and have a clean history of repayment. These loans will be secured by 2 PGs (Personal Guarantors) of repute, being trustworthy and financially sound persons, acceptable to the bank. A personal statement from the guarantor and borrower needs to be taken, that they are not defaulters of any bank. We may also have our own mechanism / system to check the authenticity of the guarantor and the borrower. The business activity proposed by the applicant to be financed under this category must reflect:

• Daily cash flows,
• Requires a low technical know-how or management skills
• Any experience held by the applicant that can be considered as an added advantage but this is not mandatory

Research and Development:

The center will provide businesses with action research based on ground realities. It will develop case studies and publications which will be made available to everyone. These case studies will comprise of local entrepreneurs’ success stories, the problems they faced and how they resolved their problems.