A Guide to SME Financing

A Guide to SME Finance is a brief guide to designing and implementing an SME finance program within a commercial bank or other financial institution, such as an NGO. This work covers the rationale behind SME finance – why it makes sense for a bank to enter this market sector, followed by a step-by-step approach to designing and implementing the program. Munro highlights the need to automate the lending process, and offers a lengthy description of how this can be accomplished. Examples of loan application, analysis, and approval forms and templates are included along with instructions for use. Additional formats are provided for loan officer goals and periodic reviews, portfolio and relationship profitability management, as well as a model credit score card to use as a 'sift' for loan applicants.

David Munro is a financial consultant and banking executive specializing in financial institution capacity building, SME program design and implementation, policy and procedure analysis and development, and credit/risk analysis and other bank training in English and Arabic. He has thirty years' experience as a development banker/project manager and advisor and, formerly, as a senior country and credit officer for major U.S. banking institutions.

1. Introduction: The Actuality and Potential of SMEs in Developing Economies
2. What is an SME? And How do SMEs Differ from Microenterprises?
3. Why Are SMEs Appropriate for Bank Financing
4. How May Banks Address the Constraints and Perceived Drawbacks to Financing SME's?
5. An Outline of the Application, Analysis and Approval Process: The Centrality of Credit Analysis
6. Streamlining and Templatizing the Credit Analysis Process
7. Staff Training
8. Documentation: Loan Agreements and Documentary Requirements
9. Marketing and Creating a Portfolio
10. Monitoring SME Loan Income/Performance Monitoring of Credit/Marketing Officers
11. Reports, Repayment Monitoring and Collections
12. Setting Up an SME Unit - Is It a Good Idea?
13. Value Propositions/Types of Products
14. Role of Loan Guarantees