• Cabinet approval granted
• Eligible SMEs to obtain working capital loans from State banks
• 250 SMEs selected so far

The Ministry of Industry and Entrepreneurship Development has repurposed Rs. 2,500 million in remaining funds from the Small and Micro Industries Leader and Entrepreneur Promotion Project (SMILE) loan scheme to guarantee new loans issued by State banks to selected Small and Medium-sized Enterprises (SMEs) currently classified as Non-Performing Loan (NPL) borrowers.

Speaking to The Sunday Morning Business, Ministry of Industry and Entrepreneurship Development Secretary Thilaka Jayasundara stated that the move was part of a targeted effort to support struggling but operational SMEs.

She explained that the ministry had decided to assist SMEs that remained in business but were categorised as non-performing borrowers by introducing a new scheme under which the Government would guarantee loans provided by State banks to SMEs selected by the ministry.

“We submitted a Cabinet paper seeking approval from the Ministry of Finance to use the remaining proceeds of the SMILE loan scheme to assist SMEs in the NPL category. Approval was granted to utilise these funds as guarantees, enabling selected SMEs with NPL status to obtain fresh loans through banks,” she said.

She further noted that approximately Rs. 2,500 million in unutilised SMILE funds had been repurposed for this initiative. 

Under this arrangement, eligible SMEs will be able to obtain working capital loans from State banks, backed by Government guarantees.

Jayasundara also revealed that around 250 SMEs had thus far been selected to benefit from this scheme.

According to statistics from the Ministry of Finance, between 1 April 2019 and 30 September 2024, approximately 494,000 loans amounting to Rs. 886 billion in the banking sector were classified as Stage 3 loans (NPLs). 

Notably, 99% of the loans categorised under Stage 3 were below Rs. 25 million in value, highlighting the significant exposure of small-scale borrowers.