Bank Usahawan providing financing up to $750,000

Newly established bank for MSMEs has introduced two financing products; average profit rate at 6.5 percent

Bank Usahawan is offering up to $750,000 in financing to micro, small and medium enterprises (MSMEs) with an average profit rate of 4.5 percent and a maximum repayment period of up to eight years.

Relationship officer Noorazwan Othman said the newly established, Syariah-compliant bank – located within the same building as the Central Post Office in the capital – is exclusively focused on providing financing for MSMEs, introducing the two products; the Tawarruq and Murabaha.

The Tawarruq is aimed at businesses looking for financing up to $500,000 for operating expenses, working capital and stocks, with a repayment period between four months to three years. The Murabaha meanwhile finances up to $750,000, targeting businesses looking to acquire fixed assets and working capital for their business with a repayment period up to 8 years.

Both financing plans are to be repaid in monthly installments on an average profit rate of 6.5 percent, measured using declining method which calculates the rate based off the remaining balance to be paid, as opposed to a flat rate which is based off the total loaned amount – and remains the same throughout the repayment period.

Noorazwan explained that the profit rate will vary based on the bank’s risk assessment which includes the business’ investment plan, income, repayment history and collateral.

The financing is open to MSMEs owned by Brunei citizens and permanent residents – between 18 to 65-years-old – who have been operating for at least 12 consecutive months.

Businesses applying should provide investment and business plans which detail what the financing will be used for as well as the business’ history and future projections. MSMEs must demonstrate or substantiate that their operations are or will be profitable for their application – which is reviewed by a committee – to be successful.

“The investment plan is a list of things that the applicants for the products intend to purchase and/or spend the money on,” said Noorazwan. “The bank also requires the business’ balance sheet, profit and loss statement and cash flow.”

He said that the bank will guide businesses on the application process and added that they are flexible on collateral; accepting moveable assets such as vehicles and jewelry in addition to traditional (fixed) assets such as property.

At the 14th Legislative Council earlier in March, the Minister of Finance II Yang Berhormat Dato Seri Paduka Dr Awang Haji Mohd Amin Liew Abdullah said the bank had received 134 applications since commencing operations earlier this year.  The first financing was disbursed in early April to an agricultural business growing melons in Belait.

Bank Ushawan has since engaged a few hundred businesses from a range of industries including food and beverage, agriculture, retail and transportation.

Bank Usahawan is located at Block A&B of the Central Post Office along Jalan McArthur and opens from Monday to Friday from 8am until 4.30pm, breaking for Friday prayers from 12pm to 2pm. To learn more visit www.bankusahawan.com.bn, and contact [email protected] or +6732233330/2233331 to get in touch directly.

This article was produced in collaboration with Bank Usahawan.