The card was shuffled for small businesses

The Bank of Russia has published a road map to support small and medium-sized businesses for the next two years. The plan involves both fine-tuning loan programs to support investment projects and the development of alternative financing – factoring and investment platforms. So far, despite numerous support measures in terms of concessional lending, SMEs lack funding. However, often the problem is not the refusal of banks to lend to companies in the sector, but the unwillingness of the business itself to borrow in conditions of increased uncertainty.

The Central Bank has published a roadmap for supporting SMEs for 2023–2024. It contains 38 measures in eight areas (development of lending, concessional financing programs, statistical information of the Central Bank, digital profile and fast payment system, stock market instruments, credit holidays, development of microfinance, improving the financial literacy of SMEs).

The Card provides for the use of reduced risk ratios for assets secured by SME Corporation guarantees, as well as an optimization of the credit risk assessment process – this should encourage banks to work with small businesses. The expansion of the use of alternative financial instruments is also present: preferential programs can be extended to factoring (the exchange of future earnings for investments; this is especially in demand among suppliers of retail chains). Conditions will be created on investment platforms for the placement of shares of fast-growing companies.

It should be noted that such instruments are in demand, since traditional preferential programs cannot cover the growing demand of SMEs for financing, access to which is also reduced due to the worsening performance of companies during the crisis. However, the business itself is not always ready to borrow even in the presence of a positive decision of banks – due to high uncertainty, the Central Bank noted earlier. Part of the problem can be solved by the initiative to provide credit holidays once during the term of the loan agreement.

Alexander Isaevich, General Director of SME Corporation, notes that the road map focuses specifically on investment projects, the share of which in lending is now small. “It is important to support companies that are ready to grow and develop their production,” he explains. The corporation is already creating a format of “manual” support for lending to SME investment projects. Designating a company as a PSE (Public Sector Enterprise) will help organize project financing for the high-tech and industrial sectors – while the mechanism is not particularly attractive. But the measure will motivate banks to issue loans more actively: with the volume of guarantees and guarantees of 207 billion rubles. it is possible to attract loans for 445 billion rubles, PSE will increase the amount to 743 billion rubles.

Judging by the content of the road map, the impact of the Central Bank’s initiatives on the sector will be limited: there are no fundamentally new measures in it. The authorities have been trying to develop alternative financing for several years, while loans are concentrated around a small proportion of established SMEs, often project companies of large businesses. Pavel Sigal, First Vice President of Opora Rossii, positively assesses the measures proposed by the Central Bank, but notes the problem of underfunding of SMEs. “The Map covers a small amount of resources. The main part is accounted for by bank loans (the portfolio is about 8 trillion rubles), but the requirements for reserves and collateral remain unchanged. As a result, established businesses can receive loans, while developing high-tech enterprises with their increased risks remain underfunded,” he explains. Member of the Presidium of Opora Rossii Pavel Samiev also speaks about the low availability of financing for SMEs. “Small business is formally a bad borrower with a high level of risk, but in practice last year the share of overdue debt on SME loans is comparable to that of other legal entities and is only 6%,” he states.

Diana Galieva