PwC MSME Survey 2020
Key Insights and Considerations for SMEs
SMEs usually do not have access to bank loans unlike firms; they mostly rely on their own savings or cash from friends and family. According to The International Finance
Corporation (IFC), 40% of formal MSMEs in developing countries, experience a finance shortage of USD5.2 trillion every year. Lending is usually dependent on the stance of
the borrower's financial position, and analyzed historical data about the business.
Resources SMEs need to secure funding;
Proper documentation:
Most funding institutions request the
cashflow history of businesses being
considered for funding. SMEs seeking
funding should produce audited
financial statements that reveal credible
financial information.
Financial statements and projections
for the business;
Financial statements are major
requirements when looking to secure a
loan, this makes it paramount for firms to
keep a proper and standard
documentation of their transactions.
•
Some alternative financing instruments are:
•
Debt securities
Peer-to peer lending
•
Leasing
Corporate Bonds
•
Equity
•
Bank overdraft
•
Factoring
Asset-based lending
.
Securitized Debt
Crowdfunding (debt or equity)
Collateral to secure loan;
It is important to have a secured,
valuable (as valuable as loan
requested) property for use as
collateral, with the value of the property
remaining valid through the loan period.
PwC MSME Survey 2020
PwC
Good reputation:
Use of technology for documentation
Companies may use tools such as excel
sheets, Power BI, cash flow budget
worksheet and other technologies to
make cashflow projections easier and
faster, this provides readily available
documentation at any given opportunity.
A borrowing firm should ensure that they
have good reputation in the business
environment, prior relationship with the
lender if possible, good historical records,
and show of commitment to social
responsibilities.
Some financing institutions are;
•
•
Bank of Industry (BOI)
Nigerian Bank for Commerce and Industry (NBCI)
Nigerian Industrial Development Bank (NIDB)
Nigerian Agricultural and Co-operative Bank (NACB)
World Bank Loan Scheme for SMEs managed by CBN
and the African Development Bank (ADB)
Development Bank of Nigeria
Source: World Bank, OECD, PwC research
June 2020
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