The CM Punjab Asaan Karobaar initiative is a financing program for businesses, launched by the Government of Punjab, in partnership with the Bank of Punjab. The purpose of this initiative is to support small and medium-sized enterprises, startups, and business expansions by providing interest-free loans. It is a great attempt by the Chief Minister of Punjab to create more jobs, foster existing businesses, and support startups.
Loan Structure:
The table below summarizes the key differences between Tier-1 and Tier-2 loans under the CM Punjab Asaan Karobaar Initiative.
| Feature | Tier-1 (T1) | Tier-2 (T2) |
|---|---|---|
| Loan Amount | PKR 1 million – PKR 5 million | PKR 5 million – PKR 30 million |
| Security Required | Personal guarantee(s) only | Secured (e.g., mortgage or other acceptable assets) |
| Eligible Business Category | Small Enterprises (SE) only | Small & Medium Enterprises (SE & ME) |
| End-User Rate | 0% interest | 0% interest |
| Loan Tenure | Up to 5 years (incl. grace period) | Up to 5 years (incl. grace period) |
| Repayment | Equal monthly instalments | Equal monthly instalments |
| Processing Fee | PKR 5,000 | PKR 10,000 |
| Loan Processing Method | Digital scoring model | Case-by-case underwriting |
| Grace Period | Up to 6 months for startups, 3 months for others | Same as Tier-1 |
Tier’s in detail
Tier 1
Tier 1 has a loan amount ranging from 1 million PKR to 5 million PKR; a personal guarantee is required as security for this loan. This is only for small enterprises. The most opportunistic and lucrative thing about both these loans is the fact that the interest rate is 0%.
The loan tenure is 5 years, along with a grace period ranging from 3 to 6 months, depending upon the enterprise. The application processing fee for this loan is 5000 PKR. Again, there is no interest rate on this loan, which means the borrower is entitled to pay back the basic amount he/she borrows without having to pay additional percentages. The money will be paid back in equal monthly installments.
Tier 2
Tier 2 has a loan amount ranging from 5 million to 30 million PKR. Security regulations on this tier are strict; other acceptable assets are required. The tenure is 5 years, along with a grace period ranging from 3 to 6 months. The application fee for this loan is 10000 PKR.
Eligibility
- Must be a Small or Medium Enterprise (SME) as defined by the State Bank of Pakistan.
- The applicant (individual or business) must be a registered FBR tax filer with a clean credit history (ECIB).
- Age must be between 25 and 55 years.
- Must be a Pakistani resident with a valid CNIC and NTN.
- The business must be located in Punjab.
- Applicants must own or rent the business premises.
Equity and security
For Tier 1, the equity is usually 0%, but is 25% if the loan is for a leased commercial vehicle(s).
For Tier 2, the equity is 20% of the amount being borrowed. 10% for women, transgender and differently abled personnel (with valid documentation).
This initiative is also creating new employment opportunities across Punjab. You can check the latest government jobs in lahore for Matric pass candidates are openings here.
What is equity?
Suppose you borrow 10 million PKR, you are required to invest 20% of that from your own money into the enterprise you are borrowing the 10 million for. Which means you will have to invest 2 million PKR into your own business, in order to successfully borrow the 10 million from the bank.
Repayment Terms
The repayment is structured in equal monthly installments.
Now, upon delay for the repayments, you are entitled to pay 1 PKR for every 1000 PKR per day. This means that if you do not repay the instalments on the repayment date. You will be entitled to pay 1 PKR for every 1000 PKR you owe the bank each day you delay the repayment. Suppose your repayment date was 18th February and you were meant to repay 50 thousand. If you delay it and pay it later, depending on how late you are, 50 rupees will be added to it as a penalty.
Additional Costs & Requirements
- Insurance (comprehensive coverage for security or vehicle)
- Valuation, legal, documentation, mortgage registration fees, stamps, duties as applicable
Handling fee:
- 0% for startups (Greenfield)
- 3.00% per annum for existing (Brownfield) businesses
- No handling fee for climate-friendly business loans under Tier-2.
Application & Process Highlights
Loans are disbursed after security perfection and meeting the Bank’s underwriting requirements. Borrowers must open a business account with the Bank of Punjab and route business transactions through it.
Why does this scheme matter?
The purpose of this scheme is to increase jobs, reduce inflation, promote local businesses and start-ups. It is a very good scheme for those people who are afraid of interest to get an interest-free loan. From an Islamic point of view as well, it is a very good scheme. Because interest is haram in Islam, and in this loan, there is no interest. People can easily take a loan without worrying about paying back the accumulating interest, along with following the Islamic Shariah.