The lending market: a banking opportunity

Date: 2015-10-07; view: 567.

In Russia, lending to small and medium-sized enterprises is very important. For commercial banks lending to this segment is particularly relevant in today's conditions, as it has great potential for development. In addition, it is able to bear the appropriate mix of risk and return. Not so long ago the confidence of banks to the SME segment was very weak, which prompted them to contact the corporate sector for lending. But big companies do not always need borrowing, and some of them prefer to go to the financial market. From the point of view of the constancy of borrowing needs small and medium-sized businesses are clear leaders in comparison with the corporate sector. Paying more attention to the SME segment the commercial banks diversify their portfolio, which allows them to avoid excessive concentration of large volumes of loans in their portfolio.

Although the state is attempting to create favorable conditions for the development of SMEs, there are still many problems that hinder its development. One of the main issues is lack of own funds. The obvious solution is lending, but it is very often inaccessible to small and medium-sized businesses because of a number of problems:

1. Lack of required collateral;

2. In many cases, the lack of or improper maintenance of financial and operational reporting, which may be associated with low literacy of business owners;

3. The need to collect a lot of documents for the loan. This often requires time-consuming, and it is not appropriate to the borrower, if he is interested in obtaining a loan promptly;

4. Transparence of small and medium-sized businesses. Very often the company in the so-called "white Statements" underestimates turnover rates, wages, etc. for the purpose of "optimization" of taxation;

5. The absence of a unified system of evaluation of SMEs;

6. Long-term consideration of applications, often arising from the non-existence of a simplified system for consideration of applications for loans to small and medium-sized businesses.

7. Credit history. To obtain a loan in many banks organization should run a successful economic activity for at least one year, but in reality there are a large number of newly established firms that need funding.

Some of these problems do not allow banks to trust SMEs. But at the same time there are some positive aspects with respect to small and medium-sized enterprises to encourage banks to participate more actively in their lending:

1. Small and medium sized enterprises will promptly respond to changes in economic conditions and are able to more quickly solve pressing problems.

2. They are often created for the implementation of fast payback projects with high profitability.

3. Small and medium-sized organizations have fast turnover of funds

4. They minimize costs through direct participation of the company founders in the management

5. SMEs are mobile and efficient in all aspects, due to the complete control of the processes occurring in the enterprise by business the owners.

According to the research of organization SUPPORT OF RUSSIA, conducted in 2012, the company took loans mainly for the expansion of production (55%) and for the purchase of raw materials (47%).[4]