EBRD launches new wave of SME credits

Oksana Pak

One EBRD challenge is broadening access to finance for SMEs by shifting the focus of credit analysis from relationships to cash flow, says Oksana Pak.

Thanks to our experience, we know many of the tricks to SME financing. So do Turkish banks. Before the financial crisis, Turkish banks were growing their lending to small and mid-sized businesses. During the crisis, however, SMEs were hit harder than the larger companies, as the banks moved their focus back to larger
borrowers.

Since our arrival in 2009, we have been working with Turkish banks to re-establish growth in the SME portfolio – and very successfully. Through our credit lines to partner banks, we have so far disbursed over 370 million euros of loans to over 22,000 micro, small and medium-sized businesses (this number is growing daily). We help with the knowhow to lend to smaller clients in more difficult regions. Another challenge is the short tenor of loans for SMEs. This reflects average tenors of deposits in the Turkish banking system of around 60 days. Many entrepreneurs have short-term loans with more than one bank and are in a constant process of refinancing. One of our instruments – first loss guarantee, supported by EU donor funds - helps to reduce the risk of loss, which allows banks to lend for longer.

Our next challenge is broadening access to finance for SMEs by shifting the focus of credit analysis from collateral and relationships to cash flow.