Small business is gaining loans – MK

However, not everyone is eligible for concessional funding.

Contrary to some pessimistic forecasts, small business lending is developing and gaining momentum. But, despite the large-scale state support programs and the growth in grants, entrepreneurs still complain about the lack of funding and its low availability. How to solve this problem?

Small business today adapts as flexibly as possible to new economic realities. Entrepreneurs are able to meet the domestic demand of the population in many industries. So, in Moscow alone, the turnover of small and medium-sized businesses (SMEs) amounted to 2.55 trillion rubles. for the eight months of 2022, up 33% year-over-year. Small business also plays an important social role, replacing brands that have left the domestic market in a number of industries, offering new products and services, as well as providing employment by creating jobs. Therefore, the state offers support programs for SMEs.

At the moment, for banks, SMEs look like good borrowers. The share of overdue loans in the portfolio of small and medium-sized enterprises is only 6%. And this segment is even more attractive for banks than large businesses and individuals. In addition, banks have the opportunity to use state guarantee support tools. This makes it possible to reduce risks when structuring credit transactions with SMEs.

According to the Bank of Russia, the dynamics of lending to small businesses is positive, the volume of loans issued continues to grow. In the first three quarters of this year, the issuance of loans to SMEs has already reached 8 trillion rubles. The amount of issuance under the umbrella mechanism of guarantees of the SME Corporation amounted to about 177 billion rubles, and within the guarantee of regional guarantee organizations – 184 billion rubles. The share of the Moscow Guarantee Fund is 18%.

At the same time, not all small companies have enough funding, and especially preferential ones. According to the RSBI index, calculated by OPORA Rossii and PSB analysts, the share of unsatisfied demand is still more than 10%. The interviewed entrepreneurs note that access to loans continues to be difficult.

There may be several reasons for this. Firstly, most programs have strict criteria, including those for business activities. Initially, they are not designed for a wide coverage of SMEs. Secondly, entrepreneurs are still poorly informed about concrete steps to receive money and benefits. In our opinion, in order to change this, it is necessary to conduct large-scale information campaigns involving representatives of business and banks. Thirdly, state programs have limits on the amount of issuance, the allocated funds run out quickly. The banks themselves also offer preferential rates, but not all SMEs have enough. Fourth, in addition to measures to support classical lending, it is necessary to purposefully develop alternative instruments, in particular leasing, factoring and crowdfunding.

On their way to bank lending, SMEs face the challenges of a lack of liquid collateral, low business transparency and financial literacy. The issue of lack of security closes warranty support. For example, the number of applications from partner banks to the Moscow Guarantee Fund in the first half of the year doubled compared to 2021, which was also a record year. At the same time, according to the Moscow Fund for the Promotion of Lending to Small Businesses, the penetration of loans with guarantee support remains at a level of no more than 2-3% in most regions.

According to our estimates, the dynamics of small business lending will slow down by the end of the year. However, given the dynamics of the first half of the year, the loan portfolio is likely to grow by 5–7% by the end of 2022. Of course, warranty support can increase these figures. But additional measures are also important. For example, it is useful to simplify the assessment of SMEs by banks for issuing loans, to soften the requirements of the Central Bank for loan products for entrepreneurs. Credit institutions can be recommended to provide related services for entrepreneurs – marketing, tax, personnel support, accounting. This will introduce SMEs deeper into financial services and services, strengthen relations with a partner bank, and help entrepreneurs develop their business. The bank, subsequently evaluating the entrepreneur’s application for a loan, will better understand his activities and economy. And this will increase the chances of a positive decision.