Small business loan applications rose 5.7% in the last quarter of 2024, following a 3.9% increase in Q3, reflecting growing confidence among entrepreneurs. Post staff
Cambodia’s small business sector is showing renewed signs of recovery, with small business loan applications increasing by 5.7% in the fourth quarter of 2024, according to the latest report from Credit Bureau Cambodia (CBC).
The surge follows a 3.9% rise in the previous quarter, signalling growing confidence among entrepreneurs seeking capital to expand their businesses.
Industry experts attribute this growth to strong government policies that support small and medium enterprises (SMEs), as well as more active participation from financial institutions offering tailored loan products.
Te Taing Por, president of the Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC), noted that the government has played a crucial role in fostering a more supportive environment for SMEs by providing financial assistance and loan guarantees.
He explained that the government considers the SME sector the “backbone” of the Kingdom’s economy and has put in place numerous initiatives to promote growth in this segment.
“Financial institutions are also stepping in, offering loans and financial products tailored to small businesses, which has enabled them to expand their operations,” he told The Post.
“If this support continues and there is greater participation in digital financial solutions, we expect this positive trend to carry forward into 2025,” he added.
The latest CBC report highlighted a significant increase in demand for working capital loans, with growth reaching 9.6% in Q4, reflecting a shift among businesses from short-term survival strategies to long-term expansion plans.
The Tonle Sap region, in particular, saw an 86.5% jump in agriculture loan applications, indicating a resurgence in farming and agribusiness investment.
Construction loans showed more variation, with some areas experiencing growth while others remained sluggish.
Despite the optimistic outlook, access to financing remains a challenge for many small business owners.
Many businesses, noted Taing Por, are not formally registered, making it difficult to access credit from financial institutions.
These challenges continue to hinder SMEs from fully utilising financial resources to grow and expand their operations.
“Many SMEs face problems such as a lack of collateral, strict conditions for obtaining loans, and high interest rates,” said Taing Por.
“To improve financial support, financial institutions and the government should consider offering more flexible loan terms, lower interest rates and stronger loan guarantee programmes,” he added.
He believed that financial education and training are also key to helping SMEs manage their finances effectively.
As businesses gain more access to credit, concerns over loan defaults remain a critical issue.
The CBC report shows that while more small businesses are securing financing, the rate of overdue loans beyond 30 days, known as the 30+ DPD rate, remains 8.3% on average across different sectors.
The construction and agriculture industries are among the most affected, raising concerns about long-term debt sustainability.
To ensure that SMEs manage their debt responsibly, Taing Por urged business owners to adopt sound financial strategies.
He emphasised the importance of clear financial planning, regular monitoring of financial status and using loans strictly for targeted investments that drive business growth rather than for short-term operational needs.
