ATTOCK: Although the unemployed youth believes the Prime Minister’s Youth Business Loan Scheme will help establish new businesses, the conditions of naming a guarantor and submitting a technical feasibility report of the business plan is creating hurdles for it.

Therefore, it is not surprising that of the 16,000 application forms issued in Attock district alone, only 15 have been deposited at the authorised branches of the National Bank of Pakistan (NBP).

The policy states that application forms can be deposited at any NBP branch in the district, but only the main branch Attock city and main branch Fatehjang are authorised to process and issue the loan.

Under the initiative, a government employee in BPS-15 and above or someone with a net worth 150 per cent more than the amount of the loan being sought can be a guarantor.

The guarantor accepts the responsibility to repay the loan in case the borrower defaults. Meeting this condition is a Herculean task for loan seekers, the majority of whom belongs to the poor class.

Even if the condition of a guarantor is met, the second major hurdle to acquire the loan is preparing the feasibility plan of the business.

The plan requires the description of the project, critical factors, potential target market, detail of machinery or equipment being used, revenue generation, human resource requirements and the raw material required. In addition, the expected income, cash flow statement, overhead expenses and key assumptions of the project have to be spelled out as well.

This is difficult for the majority of applicants who do not have the expertise to deal with this technical task.

On condition of anonymity, some NBP officials acknowledged that these two conditions were major hurdles for people seeking the Prime Minister Youth Development loan, for which the government had dished out Rs100 bn earlier this month.

The loans under this scheme will be given out at a subsidised interest rate of eight per cent, with individual loans ranging from Rs100,000 to Rs 2 million. These will be given to entrepreneurs between the ages of 25 and 45 to help them set up new businesses or extended the existing ones.

According to the applicants, the problems of finding a guarantor and preparing the feasibility report were discouraging even though the loans were needed especially due to the subsidised interest rate.

They said the scheme was more suitable for people who had already established a business and could meet the two major conditions.

Mohammad Arif, a driver, said he wanted to apply for the loan for his unemployed son, but could not arrange for a guarantor and was unaware of how to prepare a feasibility report.

Similarly, Munir, a labourer, said he wanted to start his own business with the facility to improve his living standard, but could not meet the strict conditions.

“The government should think about this and relax the conditions,” he said.

The divisional head of NBP communication division, Syed Ibn-e-Hassan, was not available for comments.

It may be mentioned that during a media talk at Kamra on Wednesday, Prime Minister Nawaz Sharif was asked about the hurdles in the scheme. He assured the media that the conditions for the loan would be reviewed and necessary amendments would be made accordingly.