EXPERTISE > Access to Credit and Business Financing Services
It is well recognised that SME sector contributes considerably to achieving employment generation, national output, innovations, regional development. To facilitate the role of the SME sector as a development trigger, it is important to provide adequate access to credit and other financial sources. Rural finance is considered to be a vital tool in poverty reduction and rural development. There are a number of instruments aimed at provision of access to credit to SMEs and rural businesses, from provision of favourable credit lines through commercial banks to fostering development of credit cooperation.
The range of problems faced by micro and small enterprises for crediting is as follows:
- Lack of collateral
- Limited quality of credit applications
- Lack of proper company and credit history
- Lack of adequate bookkeeping (many SME are acting in the grey sector)
- Limited availability of suitable loan products
- Limited knowledge of credit officers especially in rural business and farming activities
- Complicate and non - transparent decision taking process in financing institutions
- Limited business interest of banks in crediting in general and in lending to (rural) SME especially
- High management costs in financing institutions
- Underdeveloped repayment mentality
- High interest rates allow only financing of working capital, internal rates of return for medium and
- long-term investments are much less than interest rates
Based on the experience collected during numerous projects we have developed the concept of inter-relation between rural enterprises/SMEs, banks and consultants, aimed not only at improvement of access to finance for rural population and small businesses but also ensures that the credit taken by small rural business is supported by the proper and professional advisory services.
ABG experience in the sector covers:
- establishment of institutional and legal framework for banking, microfinance, stimulation of SME access to finance
- institutional development, promotion of policy changes, attraction of investors, formation of advisory networks for exchange of know how and information
- direct advice and consulting of commercial banks in institutional set-up and restructuring, corporate governance, risk management, business planning, development of new services and financial products
- Long-term track of developing credit products and programs for specific target groups according to their needs, defining lending criteria and procedures to support their implementation
- Establishment of new and restructuring the existing banking and non-banking financial institutions and extensive assistance to institution-building, including set-up of internal structure; definition of service package; design and implementation of financial and risk management concepts and procedures; establishment of accounting and auditing systems; introduction of corporate governance principles;
- Development of credit cooperation in rural areas