Lease Financing Loan Project

Project Summary

The Lease Financing Loan Project has been implemented by Shishu Niloy Foundation (SNF) since 12 October 2022 under the PACE and RMTP projects with financial support from IFAD and PKSF. The project aims to promote entrepreneurship and employment generation by providing lease financing facilities for productive equipment and machinery. Initially, PKSF allocated BDT 5.0 million (50 lakh) to the project. Implemented through 22 branch offices with the support of 77 dedicated staff members, the initiative has enabled 35 entrepreneurs (14 men and 21 women) to establish or expand their enterprises through access to productive assets.

Unlike conventional loans, ownership of the leased equipment remains with SNF until the lease payment is fully repaid, ensuring responsible utilization of assets while reducing financial risks. Entrepreneurs contribute 20% of the equipment cost as a down payment, while the project finances up to 80% of the required investment for enterprises valued between BDT 100,000 and BDT 5,000,000.

Goal

To create sustainable employment opportunities and strengthen small and medium enterprises by improving entrepreneurs’ access to productive equipment through affordable and responsible lease financing.

Objectives

  • Facilitate access to modern equipment and machinery for promising entrepreneurs.
  • Generate self-employment and wage employment opportunities in local communities.
  • Promote inclusive entrepreneurship, particularly among women.
  • Support enterprise growth through productive asset financing rather than conventional cash lending.
  • Encourage responsible investment by requiring entrepreneurs to contribute a portion of the project cost.

Achievements

  • Successfully launched lease financing operations across 22 branch offices.
  • Mobilized 77 trained staff members for effective project implementation.
  • Disbursed the first installment of BDT 5.0 million received from PKSF.
  • Supported 35 entrepreneurs, including 21 women and 14 men, through lease financing.
  • Promoted productive investment by financing equipment for enterprises valued between BDT 1 lakh and BDT 50 lakh.
  • Introduced a secure financing model that protects both the financing institution and entrepreneurs through asset-based financing.

Challenges

  • Limited awareness among rural entrepreneurs regarding lease financing compared to traditional credit.
  • High cost of modern equipment and machinery in some sectors.
  • Ensuring proper maintenance and productive utilization of leased assets.
  • Economic fluctuations that may affect enterprise profitability and repayment capacity.
  • Expanding the program to meet increasing demand with limited available funds.

Learning

The project demonstrates that lease financing is an effective alternative to conventional lending for enterprise development. Financing productive assets directly encourages responsible investment, reduces misuse of funds, and improves business sustainability. The required entrepreneur contribution increases ownership and commitment, while women’s strong participation highlights the potential of lease financing to promote inclusive economic development. The experience also indicates that increasing awareness, technical support, and access to larger investment funds can significantly enhance the project’s long-term impact.

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