The National Credit Guarantee Institution Limited (NCGIL) is rolling out a series of credit guarantee schemes and support initiatives aimed at making it easier for Sri Lanka’s micro, small, and medium enterprises (MSMEs) to access funding.
NCGIL Launches New Credit Guarantee Schemes to Support Sri Lanka’s Small Businesses
Jude Fernando, Chief Executive Officer of NCGIL, told Finance Today that the institution is “ready to serve Sri Lanka’s small businesses.” He emphasized that many entrepreneurs struggle to secure loans because they lack traditional collateral. “Our credit guarantee schemes are designed to bridge that gap — providing financial institutions with the confidence to invest in your vision, even if you lack traditional collateral,” he explained.
NCGIL’s mission is to encourage banks and financial institutions to lend to viable MSME projects based on cash flows rather than just collateral. The company, a public-private partnership established under the Companies Act No. 7 of 2007, operates with the backing of the Government of Sri Lanka and 13 shareholder financial institutions.
Expanding Access and New Initiatives
Since starting operations in January, NCGIL has already issued its first guarantees to three financial institutions, supporting loans for three MSMEs. Through the Individual Guarantee Scheme, NCGIL covers up to 67% of approved loan amounts, reducing risk for lenders and creating new opportunities for entrepreneurs.
Over the next 12 to 18 months, NCGIL plans several initiatives to strengthen support for MSMEs:
- Non-financial support: New training and advisory programmes will be offered in partnership with other organizations to help business owners improve skills in financial management, business planning, and marketing.
- Broader reach: NCGIL aims to expand its network of partner banks and financial institutions, making credit guarantees more widely available nationwide.
- Targeted guarantee products: New schemes are being developed with a focus on gender-inclusive financing and climate-friendly business initiatives.
Addressing Barriers for MSMEs
A major challenge for many small businesses is limited access to finance due to insufficient collateral or weak financial management practices. “Many financial institutions see MSME lending as high-risk,” Fernando said. “By offering substantial guarantees, we lower that risk and help build the capacity of business owners through targeted support.”
Loans eligible under the NCGIL scheme range from LKR 500,000 to LKR 25 million, with flexible repayment terms of up to 10 years for capital expenditure and up to 3 years for working capital. The scheme gives special priority to sectors such as women-owned businesses, environmentally friendly ventures, tourism, agriculture, IT services, and exports.
Key Features of the NCGIL Guarantee Scheme:
- Guarantee Coverage: Up to 67% of loan amount
- Eligible Sectors: Agriculture, Industry, Services
- Loan Range: LKR 500,000 – LKR 25 Million
- Tenor: Capex: 1–10 years; Working Capital: 1–3 years
- Guarantee Fee: 1%–2% per annum on the guaranteed amount
- Priority Sectors: Women-led, green businesses, tourism, IT, export
Boosting Economic Development
By making it easier for small businesses to secure financing and build essential skills, NCGIL hopes to unlock business growth, create jobs, and support Sri Lanka’s broader economic development.
“Through our expanding initiatives and targeted guarantee schemes, we are not only improving access to finance but laying the foundation for sustainable entrepreneurial development in Sri Lanka,” Fernando said.
Contact:
National Credit Guarantee Institution Limited
The Secretariat, Room 321, 3rd Floor
Colombo 01, Sri Lanka
Phone: +94 705 777 805
Email: [email protected]