Rs300 Billion Export Finance Scheme to Boost SME Exports, Says Ateeq ur Rehman
Economic analyst welcomes government’s financing targets but urges banks to ease collateral requirements for small businesses
SME Financing receives a boost through the government's Rs300 billion export finance scheme.
The government’s decision to allocate Rs300 billion under the Export Finance Scheme for small and medium-sized enterprises (SMEs) is highly commendable, said economic and financial analyst Ateeq ur Rehman.
He also welcomed the government’s ambitious target to nearly double SME financing to Rs2 trillion. Furthermore, the government aims to increase the number of potential SME borrowers to 775,000 by June 2028.
According to Rehman, the initiative will improve SMEs’ access to concessional financing, reduce their cost of doing business and strengthen Pakistan’s export competitiveness.
He praised the State Bank of Pakistan (SBP), Small and Medium Enterprises Development Authority (SMEDA) and Trade Development Authority of Pakistan (TDAP) for supporting SMEs. He said these institutions had introduced flexible policies and concessions to encourage small businesses.
Export Finance Facility Offers Two Financing Categories
Rehman explained that the export finance facility administered by EXIM Bank offers short-term working capital through two categories. These include transaction-based financing and performance-based financing.
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He said the government’s facility provides SME exporters with financing at a 6% end-user interest rate. This compares with the existing 12% policy rate.
He further explained that the 6% financing rate comprises two elements. According to his assessment, a 3% reduction brings the rate below the policy rate, while banks provide a further 3% reduction voluntarily.
Working Capital Remains a Major Challenge
Rehman noted that exporters often struggle to secure working capital. Consequently, they face difficulties purchasing raw materials, meeting operational expenses and maintaining uninterrupted production.
Meanwhile, banks and financial institutions must accelerate lending to businesses, farmers, homebuyers and other underserved sectors. Therefore, improved access to finance will play a vital role in supporting economic activity.
He also highlighted the financing needs of essential infrastructure and agricultural facilities. These include purpose-built warehouses, cold chains, silos, processing units and refrigerated vehicles. In addition, agriculture requires suitable financing to support production and supply chains.
SMEs Seek Easier Access Without Heavy Collateral
Although the government’s focus on SME financing is encouraging, Rehman identified collateral requirements as a major obstacle.
He said banks and financial institutions often treat collateral as a primary condition for lending. However, this requirement creates difficulties for SMEs across several sectors, including manufacturing, trading, wholesale, agriculture and exports.
As a result, many businesses struggle to obtain financing despite their potential to contribute to exports and economic growth.
Rehman said the business community and SMEs need easier access to finance, lower interest rates and relief from stringent collateral requirements. He stressed that these measures would help small businesses expand operations, maintain production and strengthen Pakistan’s export base.
