The State Bank of Pakistan (SBP) has recently removed a major hurdle that has been hampering growth of the startup companies by allowing them to avail foreign loans as convertible debt.
The central bank said that in order to facilitate the startup companies in raising financing from abroad, it has allowed them to avail loans as “convertible debt”.
In order to borrow from foreign investors, once again, the law as it stands currently bans individuals from such borrowing, and only allows Pakistani companies to do so under very limited circumstances. It restricts the whole purpose of raising convertible debt for a startup, since the point is to get money fast from existing investors.
There has been demand from the startup companies to allow foreign loans that may be converted into equity.