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Frequently Asked Questions (FAQs)

Currently, CGCC provides credit guarantees on loans that are disbursed by banks and microfinance institutions (MFIs) who are CGCC’s partners, so-called the Participating Financial Institutions (PFIs), to businesses, especially small and medium enterprises who lack collateral when applying for loans. Simply put, CGCC acts as collateral for up to 80% of the loan amount borrowed by businesses from the PFIs, thus, reducing the physical collateral required from the borrowers.

No, CGCC does not provide direct loans. CGCC is not a bank/MFIs that can provide loans. CGCC is a state-owned enterprise working on providing guarantees on loans disbursed by the PFIs to businesses who lack collateral to the banks/MFIs. Businesses can request loans guaranteed by CGCC from the Participating Financial Institutions (PFIs).

Click here: Find CGCC’s PFIs

 

Indeed, CGCC aims to support businesses, including Micro, Small, and Medium Enterprises (SMEs) and large firms, to enhance their access to formal loans from banks or Micro-finance Institutions (MFIs) who are CGCC’s partners for both working capital and business expansion/investment.

When CGCC provides guarantees to the banks, the borrowers now have easier access to loans. They can obtain higher loan amounts from the banks because the banks are willing to lend more with less collateral requirement or without collateral. Businesses that lack collateral can approach CGCC’s PFIs to request guaranteed loans.

A credit guarantee increases your borrowing capacity. It allows you to borrow even without collateral and to get a larger loan amount with the same collateral value than you would otherwise get without a credit guarantee.

For example, without a credit guarantee, if you do not have collateral, the bank will not lend you even though you can repay the loan. With a credit guarantee, if you do not have collateral, the bank can lend you with CGCC’s credit guarantee acting as your collateral.

In another example, if you have a collateral value of 100,000 USD, the banks can probably lend you up to 70,000 USD. Now, with a credit guarantee, with the same collateral value of 100,000 USD, the banks can lend you up to 100,000 USD or even higher.

Eligible borrower:

  1. The Borrower must be a majority Cambodian-owned business (>50% ownership).
  2. The Borrower must produce a business registration issued by appropriate government authorities.
  3. The Borrower who is a non-registered business must proceed with the registration after the guarantee is approved
  4. All Borrowers should be financially viable (the PFIs should first approve the loan application)

Latest data on CGCC’s guarantee progress: https://www.cgcc.com.kh/en/publications/ 

5 Steps to applying for loans guaranteed by CGCC:

  1. Business owners shall apply loans to banks/MFIs who are CGCC’s PFIs (all PFIs)
  2. After getting a loan request from business owners, PFIs will evaluate the request base on their conditions and requirements
  3. When the loan request meets all requirements, PFIs will approve the loans and submit a guarantee application for the loan to CGCC for guarantee.
  4. CGCC will evaluate the guarantee application for the loan submitted by the PFIs. If the application is approved, CGCC will issue a Letter of Guarantee to the PFIs within 3-5 days.
  5. PFIs will disburse the Guaranteed Loan to the borrowers.

How to apply for guaranteed loan with CGCC

CGCC was officially incorporated in November 2020 and launched three credit guarantee schemes: 

“Business Recovery Guarantee Scheme (BRGS)”

launched in March 2021, aims to support businesses, including Micro, Small, and Medium (SMEs) and large firms, to enhance their access to formal loans for both working capital and investment or business expansion.

“Co-financing Guarantee Scheme (CFGS)”

launched in September 2021, aims to expand support to SMEs under the SMEs Co-Financing Scheme Phase II of the SME Bank of Cambodia.

“Women Entrepreneurs Guarantee Scheme (WEGS)”

launched in April 2022, is specifically designed for women and women-owned businesses, aiming to narrow the gap between the supply and demand for financing by providing a higher guaranteed coverage of 80% and a lower guarantee fee for all sectors with favorable credit guarantee features.

“Co-financing Guarantee Scheme for Tourism (CFGS-TR)”

a sub-credit guarantee scheme under the Co-Financing Guarantee Scheme (CFGS) offered by the CGCC to Participating Financial Institutions (PFIs) on the loans lent out under the Tourism Recovery Co-Financing Scheme (TRCS) of SME Bank of Cambodia.  

A credit guarantee of 80% on the loan principal means that CGCC is responsible for 80% of the risk associated with the loan principal disbursed by banks to businesses.

The credit guarantee plays the same role as the collateral. In the case of a loan with collateral, if the loan defaults, the banks will seize the collateral to cover the loss of the loan principal. In the case of a loan with a credit guarantee, if the loan defaults, the bank will claim from CGCC to cover the loss of the loan principal.

Therefore, the credit guarantee reduces the collateral burden on the borrower when seeking loans. At the same time, banks can reach out to more borrowers who lack collateral to provide loans with CGCC’s guarantees.

However, although the loans have collateral or credit guarantees, the borrowers have the responsibility to repay the loans.

Yes, you can. For detailed information please contact:

Tel: 023 722 123,

email: [email protected]

Facebook page: https://www.facebook.com/officialcgcc  

telegram: https://t.me/CGCCCambodia

Bonus

“5 important things SMEs should understand to apply for guaranteed loans!”

To reap the benefits of credit guarantees, the borrowers must be ready to apply for loans from the banks/Microfinance, who are CGCC’s PFIs first. Understanding how the PFIs assess the borrower’s creditworthiness helps the borrower better prepare to get the guaranteed loans.

Those criteria are: Condition, Collateral, Capacity, Capital, and Character.

Find out more: Access to guaranteed loans

 

Credit guarantees increase the borrowing capacity. CGCC provides guarantees that act as collateral on the borrower’s behalf. It is common that potential business with the ability to repay the loan is unable to borrow because of insufficient collateral. Businesses simply cannot pledge the collateral on every loan they wish to borrow. When CGCC provides guarantees to the banks, the banks should be able to take on more loans by increasing the Loan-to-Value ratio. Credit Guarantee, therefore, empowers banks to remain competitive in the market by lending out more to underserved borrowers who lack collateral, which is referred to as “credit additionally.”

Click here: Understand Credit Guarantee 

Any banks and microfinance institutions licensed by the National Bank of Cambodia are eligible to apply for CGCC’s PFIs. CGCC always welcome potential banks and microfinance institutions who are committed to expanding opportunity to disburse more loans to businesses that lack collateral.

3 Steps to become CGCC’s PFI:

  1. To become CGCC’s PFI, Banks and Micro-Finance Institutions (MFIs) need to submit PFI application to CGCC. Details on PFI application can be provided per request through the CGCC’s contact information.
  2. CGCC will review the application and submit to the Board of Directors for approval.
  3. After the Board’s approval, Credit Guarantee Agreement shall be signed by CGCC and the selected PFIs.

Requirement documents for becoming CGCC’s PFIs:

  • PFI application cover letter
  • Audited annual reports
  • Key Financial Indicators
  • Business plan with CGCC
  • Loan portfolio data
  • Risk management framework
  • Lending procedure and approval process
  • “Loan loss” handling procedure
  • PFI’s patents, licenses & certificates

For detail information to become CGCC’s PFIs, please contact CGCC via 023 722 123.

You can click here: https://www.cgcc.com.kh/en/our-product/  or contact us via 023 722 123.

 

Find out about CGCC’s Credit Guarantee Schemes:

A credit guarantee of 80% on the loan principal means that CGCC is responsible for 80% of the risk associated with the loan principal disbursed by banks to businesses.


The credit guarantee plays the same role as the collateral. In the case of a loan with collateral, if the loan defaults, the banks will seize the collateral to cover the loss of the loan principal. In the case of a loan with a credit guarantee, if the loan defaults, the bank will claim from CGCC to cover the loss of the loan principal.

Therefore, the credit guarantee reduces the collateral burden on the borrower when seeking loans. At the same time, banks can reach out to more borrowers who lack collateral to provide loans with CGCC’s guarantees. However, although the loans have collateral or credit guarantees, the borrowers have the responsibility to repay the loans.

CGCC’s credit guarantee means that CGCC is responsible for the coverage of the risk associated with the loan principal disbursed by banks to businesses.

The credit guarantee plays the same role as the collateral. In the case of a loan with collateral, if the loan defaults, the banks will seize the collateral to cover the loss of the loan principal. In the case of a loan with a credit guarantee, if the loan defaults, the bank will claim from CGCC to cover the loss of the loan principal.

CGCC provides a claim only when the loan is classified as a “loss“. According to the National Bank of Cambodia’s Prakas on Credit Risk Grading and Impairment Provision, a loan is classified as “Loss” is when past due 180 days or more (for short-term loan) or past due 360 days or more (for long-term loan).

You can explore about existing products of our PFIs by clicking this link: https://www.cgcc.com.kh/en/pfis-guarantee-product/

Welcome! CGCC is please and appreciate your interest. Please call to 023 722 123 for the appointment or send your inquiries to:

CGCC strongly believes that participation from financial institutions in utilizing the credit guarantees for the right purposes will bring more benefits for improving access to finance for business owners, especially the SMEs in Cambodia.

CGCC hope to see you soon!