LAHORE (PR) - Small and Medium Enterprises Development Authority has issued a rebuttal that refers to the article published in The Nation on December 20, 2013. SMEDA has contradicted certain versions made in the article about the Prime Minister’s Youth Business Loan (PMYBL) scheme.

The rebuttal said that in wake of the PM’s Youth Business Loans scheme, SMEDA has developed fifty six (56) Pre-feasibility Studies, exclusively to facilitate potential applicants, keeping in view the maximum limit of Rs2 million debt financing by the banks, under the scheme.

The assessment of the scribe in terms of maximum possible beneficiaries to be 5,000 is erroneous. Even if all loan beneficiaries are disbursed the maximum amount of Rs2 million, the number of loan beneficiaries would be 50,000, instead of 5000, as reported. Additionally in case of an average loan disbursement of Rs1 million, the total number of loan beneficiaries would be 100,000. Similarly, the scribe’s assertion on the size of the investment in the pre-feasibilities being higher than the generally expected loan requirement, rendering the pre-feasibilities less relevant, is also not valid, as the investment size is not cast in stone.

Furthermore, the banks have also been advised to entertain small loans based upon applicants’ actual loan requirement. Therefore, the assertions made in the article are unjustified. 

It is clarified that the objective of a pre-feasibility is primarily to facilitate potential entrepreneurs in developing an understanding on various aspects of a particular business, such as start-up and production costs, marketing, finance, management etc. Therefore, the pre-feasibility serves as a useful guide for loan applicants. A pre-feasibility is fundamentally different from a business plan, as the investment proposed in a pre-feasibility is indicative and may vary according to the potential entrepreneur’s actual business needs.

More-over, the pre-feasibility can be scaled downwards or upwards, depending upon the actual investment needs. For instance, the cost of opening a boutique shop on a high street in a metropolitan city like Karachi, would vary from that of one being set-up in a smaller town. In fact the cost of setting up a business within the city also varies. Similarly investment required for setting-up a dairy farm with 10 animals will be substantially different from a smaller farm with 5 animals. A small meat shop kiosk, only selling fresh meat will require lesser investment in comparison to a high-end meat shop with refrigeration facilities, selling differentiated meat products. Therefore, the actual loan size of each applicant, even in the same business would vary from location to location and the size of the business planned.

The popularity of SMEDA’s pre-feasibility studies, both English and Urdu, is evident from the number of downloads, which stands at over 5.69 million. In fact, 2.1 million pre-feasibility studies in Urdu have been downloaded within a short span of 11 days, alone. In order to facilitate loan applicants to develop their business plans, SMEDA has developed Business Plan Templates, (English & Urdu), as well as a training video documentary on the same.

Furthermore, financial calculators have been developed, to help loan applicants to calculate loan repayment, income statements, cash flow statement, and balance sheet, as per their own investment size. To date, the resources and tools developed by SMEDA have recorded 6.14 million downloads, which is a testament to the popularity and usefulness of these tools.

The SMEDA pre-feasibility studies have been developed, keeping in view the growth potential, indigenous strength and market demand in key business sectors, to spur greater economic activity across all regions of Pakistan.

It may also be noted that if an applicant’s business proposal does not fall under the SMEDA pre-feasibility studies, the applicants are also encouraged to bring in their own business plans for which they can also get assistance from SMEDA.