Securing financing for SME’s

WINDHOEK, Mar. 9 – Finding financing to start their business is the leading issue most entrepreneurs find themselves in, causing a stalemate that prevents them from seeing their dreams come to fruition.

However, this should not serve as a deterrent because Small/Medium Enterprises (SME’s) play a vital role to the socio-economic development of any community.

“SME’s are one of the driving forces in job creation and local economic development. They provide much of the essential goods and services for communities especially those who are disadvantaged. It is therefore imperative that we find ways to aid young entrepreneurs to finance their SME’s,” Standard Bank’s Head of Enterprise Banking, Dennis Isaacs, said this week.

Admittedly, financing for SME’s is challenging for many financial institutions because the lack of information which makes assessing and serving this sector difficult and expensive.

“There are various factors that affect financing for SME’s, some of these can lead to added expensive costs for the SME’s, especially when they have to look at sources from outside the formal financial sector for funding, thereby hindering the sector’s growth. All hope is not lost as there are ways to navigate around this to ensure that you can secure funding for your SME,” he explained.

Isaacs advised that the rise of alternative, technology-enabled means of financing, such as new business models based on advanced data analytics, supply chain and e-commerce based finance and other innovations may offer a way out.

He pointed out that innovations in supply-chain financing and government procurement; the use of technology to reduce risks, enhance efficiency leading to lower costs; securitization and other means of obtaining capital relief for traditional sources of finance; introducing non-traditional sources of long-term capital and capacity building for both financiers and SMEs, are just some of the ways how funding can be secured.

Additionally, the need to catalyse exchange of knowledge, expertise and experience from both the demand and supply sides, creating a shared approach to common issues is also imperative to the cause as it will help create scale and momentum for SMEs.

“Thanks to innovations and technological advancements, there are insurmountable ways for people to raise funds for their SME’s outside of the traditional norms we are used to. Crowdfunding, Bootstrapping, Factoring, are just some of the ways that people can use to raise funds but each of them come with their limitations so you have to choose which best supports your business,” Isaacs concluded.

Caption: Standard Bank’s Head of Enterprise Banking, Dennis Isaacs, this week urged that it is imperative to work on innovations that will help SMEs securing funding for the businesses as they are essential for the socio-economic development of any community. – NDN Staffer