Small and Medium Enterprise (SME) Finance

Challenges

Small and medium enterprises (SMEs) are widely recognized today as the backbone of national economic development. Though small individually, the SME sector as a whole has gradually emerged as a dominant economic player. SMEs stabilize economic growth and drive regional economic development in many developing and developed economies. Such businesses comprise a widely divergent spectrum of establishments. They engage in economic activities ranging from small-scale enterprises to modern industrial units using sophisticated technologies. Though recognized as a priority sector in almost all countries, small businesses often have difficulties financing growth and innovation. SME financing is considered by many financial providers to be a risky activity that generates high transaction costs and low returns on investment.


GFA Approach

GFA Consulting Group implements projects and builds capacities in developing countries and emerging markets. Our experts aim at developing financially self-sustainable institutions and at improving their performance continuously. We promote sound banking routines and operations management according to best industry practices and international standards. GFA teams focus on the creation of internal capacities to ensure lasting and rollout effects.


GFA Concept and Services

GFA’s Financial Systems Development department supports banks and specialized financial institutions in developing and implementing innovative loan products and lending technologies to improve SMEs’ access to financial services. Based on GFA’s longstanding experience implementing SME lending and capacity building projects worldwide, we have developed a set of field-proven tools and methodologies. These products ensure the application of best practices, and provide our clients and partners with tailor-made solutions.


GFA’s main services include:

Portfolio development
The development of a high quality SME loan portfolio is the key condition for project success. It is also one of the expected results of our consulting services. GFA is thus committed to the timely roll-out of SME lending. Our services encompass product development, and the preparation of marketing campaigns and instruments, which raise awareness and stimulate project pipelines.

Capacity building
In order to provide SMEs access to financial services, financial intermediaries have to operate quite differently than in their mainstream banking operations. The keys to success in this market include client-appropriate financial products, standardized cash flow and character-based lending procedures. In addition, loan analysis tools, an adequate credit risk management framework, and effective internal control and audit procedures are essential. Often, these elements are embedded in an adequate manage-ment information system (MIS). GFA addresses these success factors by developing and implementing tailor-made solutions based on a participatory and consultative approach.

Training
High-quality training is a guarantor of sustainability. GFA’s educational approach and methodology is therefore based on a combination of classroom inputs and practical, on-the-job training developed from interactive adult education principles.