Credit tightening stifling SMEs
MEs are finding it harder than ever to get financing from the banks. Alarmingly, more than half or 55% of 700 applications for financing, including term loans, trade facilities and property refinancing have been rejected in 2012, with only 12.5% of all trade financing applications approved. Jeff Koh, Managing Director of SME consultancy firm Loyal Reliance reckons banks should have been more willing to approve applications for such facilities if applicants can prove they have bonafide operations. “Rejections may have occurred because banks may be more stringent in their selection regarding approval of such facilities now due to the high uncertainties of 2012.” But Kavita Bedi, Standard
Chartered Bank’s regional head of SME banking for Singapore and Southeast Asia, says it is a common misconception that when loan or trade applications are rejected, it is due to banks enforcing tighter credit criteria on businesses. “A term loan for example might not be approved if, in discussions with the business owner, it is found that there are no immediate needs for the funds and the intention of the business is to seek stand-by cash,” adds Bedi. Ultimately, Bedi suggests urges SMEs to collaborate with their banker, share their anticipated difficulties and not wait for their banker to discover these for themselves. “All these will improve business-banker relationships and help ensure healthy cash inflow to the SME community,” he concludes.
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Published on Feb 13, 2013