Credit Borrowing In SMEs
Small Medium Enterprises (SMEs) have an important role to play in ensuring a healthy economy. In UK, statistics from the Federation of Small Businesses show that small businesses account for 99.3% of all private sector businesses at the start of 2016 and 60% of all private sector employment.
“There is clear evidence that external funding can have a hugely positive impact on an SME.” – Robson, CEO, Ultimate Finance[1]
Reasonable access to credit is integral to aid these enterprises in growing and expanding for them to contribute further to the economy. However, there are several factors that are impeding the accessibility of credits to SMEs, such as uncertain global political climate, slowing rates of economic growth and many more. These factors resulted in a situation where not only SMEs are unwilling to apply for credit, but there are also much reluctance on the lenders to grant credit lending.
In a report on 1,000 small businesses, done by Close Brothers[2] in 2016, results have shown that SMEs are not fully utilising the available channels to finance their businesses. They are mainly reliant on personal savings, overusing overdrafts, personal credit cards etc. It was also surveyed that over a fifth of the 1,000 have been turned down for finance, with half of them being turned down more than once. For first time borrowers, the rejection rate is around 50 per cent, and out of these SMEs, over a third of them whom were rejected on their first round were also unaware of other financial alternatives beneficial to their businesses.
Small businesses that have access to appropriate financial products are more likely to prosper and grow and less likely to default on payments. Hence, safeguarding their credit rating and being more able to access finance to facilitate future growth.
SME Banking 3.0 – Credit Analysis Skills For The SME Banker is a course that focused on helping bankers involved with SME borrowers. The course content will benefit both line bankers at the customer relationship level and credit specialists overseeing lending decisions, and personnel involved in the bank service line. Through this course, participants will develop skills to accurately and effectively evaluate both qualitative and quantitative factors and assess the creditworthiness of a small business borrower in face of the lack in formal financial report information or tangible collateral security. For more information, please visit us at http://www.opuskinetic.com/training or contact us at info@opuskinetic.com.
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[1] Ultimate Finance is a company that provides financial solution for SMEs in UK.
[2] Close Brothers Group plc is a leading UK merchant banking group providing lending, deposit taking, wealth management services and securities trading.