E.Sun Bank (玉山銀行) yesterday unveiled a program allowing social enterprises take out loans more easily and at lower interest rates to help boost their development.
The bank would provide loans of up to NT$3 million (US$97,056) for each social enterprise at 1.6 percent interest, president Joseph Huang (黃南州) told a news conference in Taipei.
The interest rates for regular corporate loans are usually at least 2 percent, he said.
The total amount of lending for the new program is capped at NT$100 million, which means at least 30 social enterprises could benefit from it, Huang said.
The bank is cooperating with the Taipei City Government for the program and only social enterprises registered in the city can apply for loans, Huang told the briefing attended by Taipei Deputy Mayor Teng Chia-chi (鄧家基).
As there is no comprehensive and official definition of a social enterprise in Taiwan, the bank would ask four business incubators known for helping the development of social businesses to recommend qualified entities, Huang said.
The four incubators are B Current Impact Investment Inc (活水社企投資開發公司), Taiwan NPO Self-regulation Alliance (台灣公益團體自律聯盟), Social Enterprise Insights (社企流股份有限公司) and B Lab Taiwan (B型企業協會), an association that helps companies obtain B Corp certification, the bank said.
After being recommended, the enterprises would need to apply to the Small and Medium Business Credit Guarantee Fund of Taiwan (Taiwan SMEG, 中小企業信保基金) for qualification, as the fund would provide credit guarantees for them, Huang said.
The firms would also need to pass a review by the city government, he added.
It is not easy for social enterprises to take out loans, as their staff usually do not know how to prepare financial statements, which are crucial for banks when evaluating loan applications, a bank official surnamed Li (李) told the Taipei Times.
As social enterprises’ profits are not as high as those of regular companies and as they do not have enough assets to be used as collateral, they often end up paying higher interest, Li said.
Taiwan SMEG, which normally offers credit guarantees of 80 percent, said that it would lift the guarantee percentage to 90 percent for social enterprises, Li added.
The move would help reduce risks for the bank, Li said, adding that if a social enterprise defaulted on a loan, Taiwan SMEG would recognize 90 percent of the debt, with the bank recognizing 10 percent.
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