Money for something: Papua New Guinea SMEs should be cautious about loans


The PNG Government recently launched its K200 million loan package for SMEs. Business Advantage PNG asked Akae Beach from Beach Accounting Advisory to provide some practical advice for businesses considering a loan.

Credit: Mohamen Hassan/Pixabay

‘Don’t just run and get a loan until you have looked at your business very carefully with your advisor.’

That’s the advice from Akae Beach, founder of Beach Accounting Advisory, a firm that helps small businesses make smart money decisions.

Beach has seen a surge of interest in loans since the Papua New Guinea government announced it would provide K200 million for loans to help small businesses struggling in the wake of the COVID-19 pandemic.

‘It is a good idea for businesses that can afford it. It is going to cost the business more if they are struggling.’

Beach says a lot of businesses will jump at the chance of additional financing giving them ‘room to breathe’ but she cautions that, if a business is really struggling, the additional debt may push them into insolvency if not handled correctly.

‘It is a good idea for businesses that can afford it,’ Beach says. ‘It is going to cost the business more if they are struggling. Some support from government without interest would have been ideal, but this is the only option available for a lot of businesses.’

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Debt burden

Beach Accounting Advisory’s Akae Beach. Credit: Rocky Roe

Beach’s biggest concern is that business owners will take on the debt and find themselves unable to pay the money back.

‘It is great for businesses who know how to make repayments or to stick to a budget but for businesses who have no idea and just live from day-to-day, I think they are going to struggle,’ she said.

‘If it was in a normal year, they would be getting the money to expand their businesses but, for this year, most businesses will be taking on the concessional loans to repay their debts, help with their cash flow, and to keep the lights on.’

Her advice is to use some of the money for relief and some for expansion or consolidation.

‘It would be a great idea to use this to both pay off their bills and look at developing new income streams,’ she adds.

Do you really need a loan?

Beach, who is currently offering free one-hour consultations to SMEs, also advises that SMEs need to ask themselves if a loan is the right way to go.

‘Can you do without the loan?’ she asks. ‘Explore other options; a supplier might be able to suspend their repayments at this time, or let a business pay in instalments.

‘If you are getting the loan to help reduce your costs, that is great – but what are you doing about your cash in-flow?’

‘If you get relief from your suppliers, it does not come with interest.’

She also suggests that SMEs can use the money to purchase some equipment.

‘We have clients that are also trying to purchase a capital item that they are using in their business to make money, get more customers or make more sales – now that I would encourage,’ Beach says.

Beach tells Business Advantage PNG that she understands what businesses are going through. She has struggled herself with getting paid by some of her SME clients, so she has had to cut costs, delay some budgeted expenditure and find new revenue streams.

Cash flow is king

Beach says that many small businesses lose sight of their cash flow in a time of crisis but it is not only key to getting the loan in the first place, but it is integral to paying the money back.

‘If you are getting the loan to help reduce your costs, that is great – but what are you doing about your cash in-flow?’ she asks.

She suggests small businesses could also talk to Business Link Pacific, a New Zealand government-funded group that offers a matchmaking service between in-need SMEs and qualified advisors, which can also provide fee subsidies.

According to Beach, it is this sort of professional advice that will make the difference between a loan being a blessing or a curse.


  1. SME loan from bsp will not be accessible by SMEs because bsp policy is preventing loan because of cash equity. Why cash equity? It’s not bsps money so their policy should not no apply. It’s the government intention to support sme and such policy should not prevent people from accessing loan.

    • Very true. They should not entirely ask for liquid cash security of 30%. Just take whatever is offered as security. Was really frustrated when asked for cash equity when I submitted my application.

  2. How will i apply for loan?

    • Through BSP or the National Development Bank.

    • Robert Pes Waika says

      I hope this scheme is not another way of dishing out Money to well established Businesses, who knows, the money is later used for political gain. Acknowledged that Nat. Elect. is around the corner… Iam saying this because the money hardly reaches the Struggling Business because they simply can’t afford to come up with the Equity required by the Banks.for these Businesses to obtain a Total amount of money needed for their Struggling Needs to survive This is not new.. JUST REVIVE AGRICULTURE BANK.. IT WAS SIMPLY AND BETTER . Good luck and God Bless us all..

      • Beverly P Tara says

        This is simply the NDB which was previously Agriculture Bank they did alot of lending helping alot of SME’s but what became of these SME’s some progressed whilst some bogged down simply because they could not manage their budget as per their proposals.

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