The State Bank of Pakistan (SBP) removed a significant hurdle to startup enterprises’ expansion by enabling them to take out international loans in the form of convertible debt.
The central bank stated that it has authorized fledgling enterprises to obtain loans as “convertible debt” to help them raise finance from abroad.
In order to borrow from foreign investors, the law currently prohibits individuals from doing so and only permits Pakistani organizations to do so in extremely limited circumstances. Because the aim of raising convertible debt for a company is to receive money quickly from current investors, it limits the entire purpose of doing so.
Startup companies have requested that foreign loans be allowed to be converted into equity.
