New credit guarantee firm to boost MSME loan access
The government has taken another step in closing the financing gap for small businesses by reducing collateral barriers and sharing lending risks with commercial banks through the establishment of Lao Credit Guarantee Sole Company Limited (LCGC).
The official launch of the company in Vientiane on Thursday signified an important shift in the nation’s financial landscape. By guaranteeing a portion of bank loans, the state-owned entity enables financial institutions to lend based on a company’s potential rather than just its physical assets.
The event was attended by Deputy Prime Minister Saleumxay Kommasith, senior government officials, commercial bank executives, and development partners, reflecting strong collective support for inclusive economic growth.
Speaking at the ceremony, Minister of Industry and Commerce Mr Malaythong Kommasith described Lao Credit Guarantee Sole Company Limited as having the potential to break down barriers for promising entrepreneurs who have traditionally been sidelined by strict collateral requirements.
“LCGC’s operations will be a key mechanism to encourage micro, small, and medium-sized enterprises (MSMEs) to expand and create jobs for society, increase liquidity within the economic system, and strengthen domestic production to reduce imports and promote exports,” he said.
The initiative addresses a long-standing hurdle in the Lao economy, where talented entrepreneurs often miss expansion opportunities due to a lack of assets to secure capital.
Under the new scheme, banks will share the risk with LCGC, allowing for more confident lending to MSMEs.
The company, which is entirely owned by the Ministry of Finance and regulated by the Bank of the Lao PDR, has been in development since July 2024 and was officially registered in December of the same year.
During the launch ceremony, the company cemented its operational status by signing partnership agreements with several major commercial banks. These were the Agriculture Promotion Bank with a commitment of 200 billion kip, Banque pour le Commerce Extérieur Lao (BCEL) Public with 50 billion kip, and BIC Bank, Canadia Bank, Maruhan Bank, and RHB Bank Lao at 30 billion kip each.
These partnerships ensure that the credit guarantee scheme is immediately operational, allowing businesses with strong ideas but limited collateral to begin acquiring necessary capital.
LCGC plans to expand its partnerships and publicise its existence to the small-business community. The government anticipates that this development will not only foster business growth and job creation but also strengthen Laos’ overall financial resilience by bridging the gap between banks and the private sector.
