The Asian Development Bank (ADB) is set to extend a US$100 million loan to Bangladesh to improve access to finance for small and medium-sized enterprises (SMEs), which remain largely excluded from formal lending channels.

Officials from the Economic Relations Division (ERD) confirmed on Tuesday that negotiations with the Manila-based lender will take place on Wednesday to finalise the assistance package under the proposed Second Small and Medium-Sized Enterprise Development Project (Phase II).

The new loan, drawn from ADB’s ordinary capital resources, follows a $200 million financing package under the first phase of the project, which supported a range of cottage, micro, small and medium enterprises (CMSMEs). Of the earlier amount, $133.3 million was allocated for small businesses and $66.7 million for medium-sized enterprises.

According to ERD officials, the upcoming funds will be channelled through Bangladesh Bank, with implementation support from the Bangladesh Small and Cottage Industries Corporation (BSCIC) and the SME Foundation. These agencies will jointly disburse $66.7 million to CMSMEs, with the remainder to be distributed through commercial banks and financial institutions.

The initiative aims to address a long-standing financing gap in the sector. A World Bank report estimates a credit shortfall of Tk 237 billion (US$2.8 billion) in Bangladesh’s CMSME segment. Despite accounting for nearly 85% of the country’s employment and comprising 99% of non-farm enterprises, these businesses have far less access to formal financial services than their South Asian peers.

The loan is expected to facilitate business growth and employment generation across the sector.