This document discusses financing options for cleaner production projects at small and medium enterprises. It begins by outlining various potential sources of financing, including commercial banks, equity offerings, leasing companies, and public sources. It then focuses on commercial banks, explaining their loan approval process and criteria. Banks evaluate the economic viability of projects and the financial status of applicant companies. Barriers to bank loans for SMEs are high perceived risk and lack of documentation or collateral. However, trends in sustainable banking and specialized financing facilities are improving access. The document also describes exercises for participants to analyze their own experiences seeking project financing.
Credit ratings are evaluations of the creditworthiness of borrowers conducted by credit rating agencies. They indicate the probability that a borrower will pay back debt. The key credit rating agencies in India are CRISIL, ICRA, and CARE. Credit ratings help investors assess risk levels and help companies receive lower interest rates on debt. Ratings are determined based on both quantitative and qualitative analysis by rating agencies and are represented by letter designations such as AAA, AA, A, BBB, BB, etc. Higher ratings signify lower default risk while lower ratings indicate higher risk.
Sustainability and investor awareness 28022014BFSICM
The document discusses ways to improve investor awareness and protection in India. It suggests that the Investor Protection Fund managed by exchanges be better utilized for continuous investor education programs. It recommends developing different modules on fundamentals of investing, financial markets, risk profiling, and behavioral finance to educate investors. It advocates for a train-the-trainer approach and expanding programs through online media, local representatives, and industry bodies to reach more investors across the country in local languages. The goal is to empower investors and restore their confidence in capital markets.
This powerpoint demonstrates a successful internship for Commerce Bank in Kansas City, Missouri. This gives an overall synopsis of the marketing internship. Enjoy!
2011 Investors' Meeting Presentation - São PauloKianne Paganini
PINE is a Brazilian bank that specializes in providing financial solutions to medium and large companies. It has a diversified product portfolio including corporate credit, hedging instruments, and investment banking services. PINE focuses on long-term client relationships and tailored solutions. It has a solid capital base and experienced team. Financial results have been improving with growth in the credit portfolio and diversification of revenues and funding sources.
Finance companies provide financing for consumers and businesses and have grown significantly since the 1980s. They issue commercial paper and loans to generate income. Their main risks include default, liquidity, interest rate, and rollover risk. Finance companies are classified by the customers they serve, such as consumer, business, or sales finance companies. Their balance sheets are comprised mostly of loan portfolios, commercial paper, and notes as assets and liabilities.
The document discusses recent developments in fintech companies and innovations. It provides definitions of fintech and describes the evolving relationship between fintech startups and banks. Global fintech venture capital funding has increased significantly in recent years. The most frequently used fintech services are money transfers and payments. There have been many recent innovations in payments, clearing, settlement services, and market support services using technologies like distributed ledger, artificial intelligence, and blockchain. Regulations are evolving to support fintech innovations through regulatory sandboxes and changes in international regulations like PSD2 and GDPR.
This document discusses project financing and planning for small businesses. It addresses why financing plans are needed, determining funding requirements, and potential sources of capital. Short-term and long-term financing needs are examined. Factors that influence working capital requirements like the nature of business, operating cycles, and seasonal variations are also summarized. The document provides an overview of evaluating business ideas, conducting feasibility analyses, and selecting an appropriate business structure. Key steps in project planning like setting objectives, securing resources, and commercializing are highlighted at a high level.
Credit ratings are evaluations of the creditworthiness of borrowers conducted by credit rating agencies. They indicate the probability that a borrower will pay back debt. The key credit rating agencies in India are CRISIL, ICRA, and CARE. Credit ratings help investors assess risk levels and help companies receive lower interest rates on debt. Ratings are determined based on both quantitative and qualitative analysis by rating agencies and are represented by letter designations such as AAA, AA, A, BBB, BB, etc. Higher ratings signify lower default risk while lower ratings indicate higher risk.
Sustainability and investor awareness 28022014BFSICM
The document discusses ways to improve investor awareness and protection in India. It suggests that the Investor Protection Fund managed by exchanges be better utilized for continuous investor education programs. It recommends developing different modules on fundamentals of investing, financial markets, risk profiling, and behavioral finance to educate investors. It advocates for a train-the-trainer approach and expanding programs through online media, local representatives, and industry bodies to reach more investors across the country in local languages. The goal is to empower investors and restore their confidence in capital markets.
This powerpoint demonstrates a successful internship for Commerce Bank in Kansas City, Missouri. This gives an overall synopsis of the marketing internship. Enjoy!
2011 Investors' Meeting Presentation - São PauloKianne Paganini
PINE is a Brazilian bank that specializes in providing financial solutions to medium and large companies. It has a diversified product portfolio including corporate credit, hedging instruments, and investment banking services. PINE focuses on long-term client relationships and tailored solutions. It has a solid capital base and experienced team. Financial results have been improving with growth in the credit portfolio and diversification of revenues and funding sources.
Finance companies provide financing for consumers and businesses and have grown significantly since the 1980s. They issue commercial paper and loans to generate income. Their main risks include default, liquidity, interest rate, and rollover risk. Finance companies are classified by the customers they serve, such as consumer, business, or sales finance companies. Their balance sheets are comprised mostly of loan portfolios, commercial paper, and notes as assets and liabilities.
The document discusses recent developments in fintech companies and innovations. It provides definitions of fintech and describes the evolving relationship between fintech startups and banks. Global fintech venture capital funding has increased significantly in recent years. The most frequently used fintech services are money transfers and payments. There have been many recent innovations in payments, clearing, settlement services, and market support services using technologies like distributed ledger, artificial intelligence, and blockchain. Regulations are evolving to support fintech innovations through regulatory sandboxes and changes in international regulations like PSD2 and GDPR.
This document discusses project financing and planning for small businesses. It addresses why financing plans are needed, determining funding requirements, and potential sources of capital. Short-term and long-term financing needs are examined. Factors that influence working capital requirements like the nature of business, operating cycles, and seasonal variations are also summarized. The document provides an overview of evaluating business ideas, conducting feasibility analyses, and selecting an appropriate business structure. Key steps in project planning like setting objectives, securing resources, and commercializing are highlighted at a high level.
Investment Policy of Banks-B.V.RaghunandanSVS College
This document discusses the investment policy of banks, outlining criteria like liquidity, profitability, and statutory compliance. It describes the components of a bank's investment portfolio, including money market instruments, and their loan portfolio priorities like priority sector and consumer lending. The document also covers principles of their investment/lending policy like diversification, safety, and debtor evaluation. It outlines tools for portfolio management such as asset-liability management and managing different types of risks.
Project finance is a method for financing large infrastructure projects through a special purpose vehicle (SPV) that is funded by multiple participants spreading risk. It relies on future project revenues rather than corporate assets to repay loans. Key participants include sponsor companies, host governments, multilateral development banks, commercial banks, and contractors. Project finance is increasingly used for projects in sectors like power, transportation, oil and gas, and more in both developing and developed countries. It allows private sector participation in infrastructure through public-private partnerships.
This document discusses analyzing the financial statements of commercial banks. It covers key components of bank balance sheets and income statements, as well as off-balance sheet items and how they are evaluated. Regulators use CAMELS ratings to assess banks, focusing on capital adequacy, asset quality, management, earnings, liquidity, and market sensitivity. Return on equity is a key framework for analyzing bank performance by decomposing it into return on assets and equity multiplier. Various ratios like net interest margin, overhead efficiency, and components of profit margin provide additional insights. The appropriate analysis depends on a bank's niche and size.
Financial Reporting Updates for 2020 and Beyond and Covid-19 Impact ArgyrisThoma
Aim: The IFRSs Update seminar has been specifically
developed to bring experienced preparers and users of
IFRSs financial statements up-to-date with the latest
developments and refresh key concepts and issues on
challenging requirements of core IFRSs.
Objective: The seminar includes coverage of effective
and issued IFRS and recent developments. On
completion of this seminar participants should be able
to highlight current developments in IFRS/IAS.
Participants’ Profile: The seminar is addressed to
financial controllers of groups and individual
companies, accountants and auditors with either
professional qualifications or relevant experience in
preparing, analyzing and presenting financial
statements.
This document discusses project financing. It provides an overview of the stages of project financing, sources of financing, participants and criteria. It also discusses principal agreements, project risks, and risk identification through due diligence. Project financing refers to financing of long-term infrastructure, industrial projects, and public services based on a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cashflow generated by the project.
Traditionally, infrastructure projects in India were owned by the government, but private sector participation is now encouraged due to large investment needs. Private projects are implemented through a special purpose vehicle (SPV) corporate entity. Key parties include project sponsors, the SPV, contractors, lenders, and the government. Infrastructure projects face various risks during construction and operation that must be managed, such as construction risks, market risks, and regulatory risks.
Infrastructure Finance Fundamentals (ADN Capital Ventures)Adam Nicolopoulos
Project finance is a method of arranging financing where the lenders rely primarily on the cash flows of the project being financed, rather than the balance sheets of its sponsors. It establishes a single purpose company to develop, build, and operate an infrastructure or industrial project based on its projected cash flows. Project risks are transferred and shared among stakeholders, with lenders relying on the project's assets and cash flows for repayment rather than recourse to the sponsors. Key risks like construction, operation, maintenance, revenue, and permits are typically borne by private sector parties rather than the public sector.
The document discusses credit appraisal in the banking sector. Credit appraisal is the process used by banks to evaluate a loan applicant's creditworthiness before providing a loan. It involves investigating the applicant's financial condition, repayment capacity, collateral, and other factors. Banks consider the 3Cs - character, capacity, and collateral. The credit appraisal process at State Bank of India involves preliminary assessment, documentation, sanctioning/approval, disbursement, and post-sanction monitoring. SBI has quantitative and qualitative standards for credit appraisal and uses a rating scale to assess risk levels of borrowers.
This document discusses the role of commercial banks in microfinance. It begins by defining microfinance and describing its clients and potential demand. It then discusses the reluctance of commercial banks to engage in microfinance due to perceived costs and risks, despite advantages like branch networks. Successful microfinance programs require senior management commitment, supportive policies, specialized structures, flexible lending practices, well-trained staff, and cost effectiveness. Features of successful programs include sustainability, matching funds, employment, and strong loan repayments. The document argues that microfinance has become a suitable business for banks seeking new revenue from retail customers.
Project financing and appraisal atul raitiwarineha
The document discusses project financing and appraisal, explaining that project financing deals with how to finance projects while project appraisal focuses on evaluating which projects are worth financing. It covers the different approaches to project financing and appraisal, from the promoter and lender perspectives, and examines factors like the macroeconomic environment, institutional framework, and why markets may fail in areas like public goods, asymmetric information, and externalities.
Infrastructure Finance – Building for Growth - Funding of Infrastructure Proj...Resurgent India
Infrastructure projects were funded by equity, bank/institutional borrowings, loans from holding companies, viability gap funding, soft loans, revenue shortfall loans and funding from multilateral financial institutions, IIFCL etc
PINE is a specialized Brazilian bank that provides financial solutions to corporate clients. It has four primary business lines: corporate credit, hedging desk, investment banking/wealth management, and distribution. The bank has experienced strong growth in recent years across its business lines. It focuses on long-term client relationships and customized solutions. PINE has a diversified credit portfolio across industries and regions, with strong credit quality and low non-performing loans. The bank has increasingly diversified its funding sources through international issuances.
Public-Private Partnership Advanced Modeling with Legal Analysis - Torontommanongdo
Public-Private Partnership Modeling & Legal Analysis is a Vair Training Specialty Class and focuses uniquely on Public-Private Partnership ("PPP") projects in Canada and their related modeling issues.
Course Participants include: Infrastructure Heads, CFOs, Financial Analysts, Project Finance Teams, Corporate & Structured Finance Teams, Investment & Evaluation Professionals, Business Development Planners, Joint Ventures Specialists, Contactors, Gov\'t Finance Officers/Treasurers, Accountants, PF/PPP Attorneys
Pension funds offer tax-deferred savings plans for working individuals to accumulate savings for retirement. There are two main types of pension funds - defined benefit plans where employers commit to providing a specific retirement benefit, and defined contribution plans where employers commit to specified contributions. Regulation of pension funds in the US is governed by ERISA which sets standards for funding, vesting periods, fiduciary responsibilities, and provides insurance for underfunded plans. Global pension systems vary, with some European countries having traditional state-funded pensions.
Bancassurance involves banks selling insurance products through their existing distribution networks. It is a popular model worldwide, especially in Europe, with the global market estimated at $1.66 billion in 2018 and growing over 6% annually. There are four main models of bancassurance - distribution agreements, strategic alliances, joint ventures, and financial service groups. While bancassurance provides benefits like one-stop shopping and leveraging bank trust, it also poses challenges like different business models for banks and insurers, legal responsibilities, and adapting to digital banking trends. Critical success factors include senior management commitment, strong distribution strategies, treating insurance as core rather than add-on, and ensuring customers receive full product information.
Big banks-and-small-savers-gafis-project-report-dec2013Dr Lendy Spires
The document summarizes the findings of the Gateway to Financial Innovations for Savings (GAFIS) project, which worked with five large banks to design savings products for low-income customers. The project found that:
1) Banks can make low-balance savings accounts profitable by reducing costs through expanded use of agent networks and developing targeted products through different channels to meet customer needs.
2) Using agents as an acquisition channel helped activate more customers and increase savings activity beyond periodic withdrawals.
3) Banks are moving from a "Proposition 1.0" model of uniform undifferentiated savings accounts to a "Proposition 2.0" model of segmented products and diversified channels tailored to customer savings
Commercial banks are the largest financial institutions in terms of assets. They accept deposits and make loans. Their major assets are loans and investment securities, while deposits are their major liabilities. Banks play essential roles in payment services, maturity transformation, and monetary policy transmission. They are regulated to protect these services from disruption. Large banks engage in both retail and wholesale banking globally, while community banks focus on local retail banking. The number of banks has declined due to mergers and acquisitions.
This document provides information on two infrastructure projects in India:
1) The Vadodara Halol Toll Road (VHTRL) project, the first state highway PPP project in India, involving the upgrading of an existing road to four lanes under a BOOT model.
2) The Bandra Worli Sea Link (BWSL) project, an 8-lane cable-stayed bridge connecting Bandra and Worli in Mumbai to reduce travel time.
It discusses the project structures, financing, risks and key learnings around private sector participation and environmental/social safeguards for the VHTRL project. For BWSL, it outlines the project details and potential environmental risks.
Retail Banking Trends - A Critical MomentThe Stockker
Trends, Deresgulation / re-regulation, Retail Banking, Opportunities and Challenges, The 20 largest banks in the world, Top 15 Core Banking System Vendors, Top Banking Software / Vendors, Domestic Strategic Option, Cross Border Economies and Synergies.
This document provides an overview of strategies and initiatives to improve SME finance. It discusses key observations on SME banking profitability and challenges in the sector. It then outlines IFC's approach to addressing these challenges through advisory services, partnerships, knowledge sharing initiatives like the SME Finance Forum, and investment projects. Case studies highlight projects in Honduras, Lebanon, and China that helped participating banks grow their SME lending and improve performance.
The document discusses small and medium enterprise (SME) financing policies and programs in Bangladesh. It provides an overview of SME credit operations and definitions. The Bangladesh Bank (BB) has introduced several programmes to expand SMEs, including priority lending to small entrepreneurs and women entrepreneurs. BB monitors SME credit disbursement and recovery. Regulations for SME financing include requiring cash flow analysis, personal guarantees, exposure limits, and security requirements that vary based on loan size. The implementation of strategies aims to improve access to finance, technology, markets and training to develop Bangladesh's SME sector.
In this presentation, Anup Singh domain leader of SME Finance domain at MicroSave highlights the key opportunities for the banks in enhancing access to finance to SMEs and also retaining customers through provision of non-financial services. Amongst other things, the focus is on use of automation to enhance efficiency in the processes of SME finance, lower origination cost and reduce turnaround time in expanding access to finance to SMEs.
Investment Policy of Banks-B.V.RaghunandanSVS College
This document discusses the investment policy of banks, outlining criteria like liquidity, profitability, and statutory compliance. It describes the components of a bank's investment portfolio, including money market instruments, and their loan portfolio priorities like priority sector and consumer lending. The document also covers principles of their investment/lending policy like diversification, safety, and debtor evaluation. It outlines tools for portfolio management such as asset-liability management and managing different types of risks.
Project finance is a method for financing large infrastructure projects through a special purpose vehicle (SPV) that is funded by multiple participants spreading risk. It relies on future project revenues rather than corporate assets to repay loans. Key participants include sponsor companies, host governments, multilateral development banks, commercial banks, and contractors. Project finance is increasingly used for projects in sectors like power, transportation, oil and gas, and more in both developing and developed countries. It allows private sector participation in infrastructure through public-private partnerships.
This document discusses analyzing the financial statements of commercial banks. It covers key components of bank balance sheets and income statements, as well as off-balance sheet items and how they are evaluated. Regulators use CAMELS ratings to assess banks, focusing on capital adequacy, asset quality, management, earnings, liquidity, and market sensitivity. Return on equity is a key framework for analyzing bank performance by decomposing it into return on assets and equity multiplier. Various ratios like net interest margin, overhead efficiency, and components of profit margin provide additional insights. The appropriate analysis depends on a bank's niche and size.
Financial Reporting Updates for 2020 and Beyond and Covid-19 Impact ArgyrisThoma
Aim: The IFRSs Update seminar has been specifically
developed to bring experienced preparers and users of
IFRSs financial statements up-to-date with the latest
developments and refresh key concepts and issues on
challenging requirements of core IFRSs.
Objective: The seminar includes coverage of effective
and issued IFRS and recent developments. On
completion of this seminar participants should be able
to highlight current developments in IFRS/IAS.
Participants’ Profile: The seminar is addressed to
financial controllers of groups and individual
companies, accountants and auditors with either
professional qualifications or relevant experience in
preparing, analyzing and presenting financial
statements.
This document discusses project financing. It provides an overview of the stages of project financing, sources of financing, participants and criteria. It also discusses principal agreements, project risks, and risk identification through due diligence. Project financing refers to financing of long-term infrastructure, industrial projects, and public services based on a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cashflow generated by the project.
Traditionally, infrastructure projects in India were owned by the government, but private sector participation is now encouraged due to large investment needs. Private projects are implemented through a special purpose vehicle (SPV) corporate entity. Key parties include project sponsors, the SPV, contractors, lenders, and the government. Infrastructure projects face various risks during construction and operation that must be managed, such as construction risks, market risks, and regulatory risks.
Infrastructure Finance Fundamentals (ADN Capital Ventures)Adam Nicolopoulos
Project finance is a method of arranging financing where the lenders rely primarily on the cash flows of the project being financed, rather than the balance sheets of its sponsors. It establishes a single purpose company to develop, build, and operate an infrastructure or industrial project based on its projected cash flows. Project risks are transferred and shared among stakeholders, with lenders relying on the project's assets and cash flows for repayment rather than recourse to the sponsors. Key risks like construction, operation, maintenance, revenue, and permits are typically borne by private sector parties rather than the public sector.
The document discusses credit appraisal in the banking sector. Credit appraisal is the process used by banks to evaluate a loan applicant's creditworthiness before providing a loan. It involves investigating the applicant's financial condition, repayment capacity, collateral, and other factors. Banks consider the 3Cs - character, capacity, and collateral. The credit appraisal process at State Bank of India involves preliminary assessment, documentation, sanctioning/approval, disbursement, and post-sanction monitoring. SBI has quantitative and qualitative standards for credit appraisal and uses a rating scale to assess risk levels of borrowers.
This document discusses the role of commercial banks in microfinance. It begins by defining microfinance and describing its clients and potential demand. It then discusses the reluctance of commercial banks to engage in microfinance due to perceived costs and risks, despite advantages like branch networks. Successful microfinance programs require senior management commitment, supportive policies, specialized structures, flexible lending practices, well-trained staff, and cost effectiveness. Features of successful programs include sustainability, matching funds, employment, and strong loan repayments. The document argues that microfinance has become a suitable business for banks seeking new revenue from retail customers.
Project financing and appraisal atul raitiwarineha
The document discusses project financing and appraisal, explaining that project financing deals with how to finance projects while project appraisal focuses on evaluating which projects are worth financing. It covers the different approaches to project financing and appraisal, from the promoter and lender perspectives, and examines factors like the macroeconomic environment, institutional framework, and why markets may fail in areas like public goods, asymmetric information, and externalities.
Infrastructure Finance – Building for Growth - Funding of Infrastructure Proj...Resurgent India
Infrastructure projects were funded by equity, bank/institutional borrowings, loans from holding companies, viability gap funding, soft loans, revenue shortfall loans and funding from multilateral financial institutions, IIFCL etc
PINE is a specialized Brazilian bank that provides financial solutions to corporate clients. It has four primary business lines: corporate credit, hedging desk, investment banking/wealth management, and distribution. The bank has experienced strong growth in recent years across its business lines. It focuses on long-term client relationships and customized solutions. PINE has a diversified credit portfolio across industries and regions, with strong credit quality and low non-performing loans. The bank has increasingly diversified its funding sources through international issuances.
Public-Private Partnership Advanced Modeling with Legal Analysis - Torontommanongdo
Public-Private Partnership Modeling & Legal Analysis is a Vair Training Specialty Class and focuses uniquely on Public-Private Partnership ("PPP") projects in Canada and their related modeling issues.
Course Participants include: Infrastructure Heads, CFOs, Financial Analysts, Project Finance Teams, Corporate & Structured Finance Teams, Investment & Evaluation Professionals, Business Development Planners, Joint Ventures Specialists, Contactors, Gov\'t Finance Officers/Treasurers, Accountants, PF/PPP Attorneys
Pension funds offer tax-deferred savings plans for working individuals to accumulate savings for retirement. There are two main types of pension funds - defined benefit plans where employers commit to providing a specific retirement benefit, and defined contribution plans where employers commit to specified contributions. Regulation of pension funds in the US is governed by ERISA which sets standards for funding, vesting periods, fiduciary responsibilities, and provides insurance for underfunded plans. Global pension systems vary, with some European countries having traditional state-funded pensions.
Bancassurance involves banks selling insurance products through their existing distribution networks. It is a popular model worldwide, especially in Europe, with the global market estimated at $1.66 billion in 2018 and growing over 6% annually. There are four main models of bancassurance - distribution agreements, strategic alliances, joint ventures, and financial service groups. While bancassurance provides benefits like one-stop shopping and leveraging bank trust, it also poses challenges like different business models for banks and insurers, legal responsibilities, and adapting to digital banking trends. Critical success factors include senior management commitment, strong distribution strategies, treating insurance as core rather than add-on, and ensuring customers receive full product information.
Big banks-and-small-savers-gafis-project-report-dec2013Dr Lendy Spires
The document summarizes the findings of the Gateway to Financial Innovations for Savings (GAFIS) project, which worked with five large banks to design savings products for low-income customers. The project found that:
1) Banks can make low-balance savings accounts profitable by reducing costs through expanded use of agent networks and developing targeted products through different channels to meet customer needs.
2) Using agents as an acquisition channel helped activate more customers and increase savings activity beyond periodic withdrawals.
3) Banks are moving from a "Proposition 1.0" model of uniform undifferentiated savings accounts to a "Proposition 2.0" model of segmented products and diversified channels tailored to customer savings
Commercial banks are the largest financial institutions in terms of assets. They accept deposits and make loans. Their major assets are loans and investment securities, while deposits are their major liabilities. Banks play essential roles in payment services, maturity transformation, and monetary policy transmission. They are regulated to protect these services from disruption. Large banks engage in both retail and wholesale banking globally, while community banks focus on local retail banking. The number of banks has declined due to mergers and acquisitions.
This document provides information on two infrastructure projects in India:
1) The Vadodara Halol Toll Road (VHTRL) project, the first state highway PPP project in India, involving the upgrading of an existing road to four lanes under a BOOT model.
2) The Bandra Worli Sea Link (BWSL) project, an 8-lane cable-stayed bridge connecting Bandra and Worli in Mumbai to reduce travel time.
It discusses the project structures, financing, risks and key learnings around private sector participation and environmental/social safeguards for the VHTRL project. For BWSL, it outlines the project details and potential environmental risks.
Retail Banking Trends - A Critical MomentThe Stockker
Trends, Deresgulation / re-regulation, Retail Banking, Opportunities and Challenges, The 20 largest banks in the world, Top 15 Core Banking System Vendors, Top Banking Software / Vendors, Domestic Strategic Option, Cross Border Economies and Synergies.
This document provides an overview of strategies and initiatives to improve SME finance. It discusses key observations on SME banking profitability and challenges in the sector. It then outlines IFC's approach to addressing these challenges through advisory services, partnerships, knowledge sharing initiatives like the SME Finance Forum, and investment projects. Case studies highlight projects in Honduras, Lebanon, and China that helped participating banks grow their SME lending and improve performance.
The document discusses small and medium enterprise (SME) financing policies and programs in Bangladesh. It provides an overview of SME credit operations and definitions. The Bangladesh Bank (BB) has introduced several programmes to expand SMEs, including priority lending to small entrepreneurs and women entrepreneurs. BB monitors SME credit disbursement and recovery. Regulations for SME financing include requiring cash flow analysis, personal guarantees, exposure limits, and security requirements that vary based on loan size. The implementation of strategies aims to improve access to finance, technology, markets and training to develop Bangladesh's SME sector.
In this presentation, Anup Singh domain leader of SME Finance domain at MicroSave highlights the key opportunities for the banks in enhancing access to finance to SMEs and also retaining customers through provision of non-financial services. Amongst other things, the focus is on use of automation to enhance efficiency in the processes of SME finance, lower origination cost and reduce turnaround time in expanding access to finance to SMEs.
The document discusses international experience in developing support for small and medium enterprises (SMEs). It notes that SMEs can play a major role in economic development, but that access to finance remains a key constraint, particularly in the Middle East and North Africa region. The document summarizes recommendations from a review by the G20 SME finance sub-group, including developing country strategies, strengthening legal/regulatory frameworks and financial infrastructure, and building capacity of financial institutions to better serve SMEs. Case studies from countries like Mexico, India, Brazil, Turkey and Russia provide examples of programs that have improved SME access to finance.
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
call us at : 08263069601
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/on_demand_webinars/merchant-cash-advance/
Financing through a merchant cash advance (MCA) is used mostly by companies that accepted credit and debit cards for most of their sales, typically retailers and restaurants. The concept is this: funder purchases a portion of the company’s future credit card receivables for a discounted lump sum. The MCA funder receives the purchased credit card receivables as they are generated either by taking a percentage of the company’s daily credit card proceeds or by debiting a certain amount of funds from the company’s bank account. Depending on the risk profile of the company, it can be a more expensive form of financing for a business compared to other types of financing. This webinar explains the nuts and bolts of MCA financing, its pros, and its cons. It explores the documentation that is necessary to enter into such an arrangement, including how to negotiate that documentation.
City of philadelphia diverse supply chain presentation (1)Wayne Trotman
A proposal to stimulate growth and improve economic vitality of diverse small businesses in Greater Philadelphia by unlocking liquidity in the City of Philadelphia's vendor payments system by eliminating cash gaps across the supply chain and providing affordable financing options.
City of philadelphia diverse supply chain presentation (1)Wayne Trotman
A proposal to unlock the potential of diverse businesses and increase their economic vitality by creating a Supply Chain Finance program to provide greater access to affordable capital by leveraging the investment grade receivables of the City of Philadelphia.
This paper was presented at the Future of SMEs Banking Conference organised by Business a.m on 27th November, 2019 in Lagos. For SMEs to be able to play the role of engine of growth, Banks and other financial services provider need to be creative in managing funding and credit risks.
The document summarizes the SME Financing Guarantee Program (Kafalah Program) in Saudi Arabia. It discusses the realities of the SME sector including procedural, marketing, and financial difficulties. It then describes the role of the Kafalah Program in supporting SMEs through guaranteeing a percentage of bank loans. Key achievements from 2006-2011 are provided, including the number of projects supported, value of guarantees provided, and relative importance across economic sectors. Challenges facing the program from both banks and SME owners are outlined. Methods to promote the program further are discussed.
This document provides an outline and overview of a microfinance course. It introduces key concepts like how microfinance institutions (MFIs) differ from traditional banks and relief by offering small loans to poor clients and recycling funds to help many. It defines important financial terms like interest rates, expenses, and subsidies. The document also discusses debates in the industry around approaches like savings-led vs credit-led lending and whether MFIs should remain non-profits. The outline proposes future weeks will focus on local MFIs, hearing from clients and investors, and important books and websites for learning more.
Small Business Banking Segment StrategyCalvin Turner
Most banks believe they are committed to servicing Small Business customers. They develop products and services for this segment; they invest considerable amounts of time and money trying to improve their Small Business Bankers’ business development (i.e., sales) skills; and some may even create a line of business within the bank entitled “Business Banking” or “Small Business Banking.” But most of these efforts fail to produce the desired growth objectives because banks don’t really understand the needs of the small business customer
Raising Capital Insights, Peoria AZ Business Summit Kristin Slice
This document provides an overview of raising capital and the lending process for small businesses. It discusses various sources of capital, including commercial banks, micro lenders, SBA programs, and CDFIs. It outlines the key criteria lenders evaluate like credit history, repayment ability, collateral, management experience, and owner capital. Common lending options for new and mature businesses are presented. The document reviews preparing a loan request, ongoing lender reviews, reporting requirements, and important reminders. It concludes with a lending panel discussing their specialties and addressing common questions.
Wish Finance has developed a business model to provide loans to small and medium enterprises (SMEs) using alternative data sources. It sources funds from hedge funds and financial institutions to provide loans to SMEs based on an analysis of real-time point-of-sale transaction data, cash flow, past loan performance, and vendor payment history. Repayments are made seamlessly through deductions of 2-5% of customer payments made via point-of-sale terminals. The loans also come with insurance protection against borrower bankruptcy. Wish Finance partners with point-of-sale data providers and insurers in each market to efficiently scale its lending operations across countries.
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
Call us at : 08263069601
Approaching Your BankerTips1. Keep in mind tha.docxrossskuddershamus
Approaching Your Banker
Tips
1. Keep in mind that to stay in business banks need to make loans.
Do not be afraid to ask for one. That is what the Commercial Account Manager wants you to do. To increase your chances of getting a loan, look for a bank that is familiar with your industry and who has done business with companies like yours. Seek out banks that are active in small business financing. Some banks lend on a conventional basis (lending money without government support), while some banks participate in government programs (in the form of government participations involving direct government funds or loan guarantees). However, be aware that banks often demand stiff collateral requirements for start-ups.
2. As an entrepreneur, make sure that you are thoroughly prepared when you go to your banker's office to request a loan.
You need to show your bankers that a loan to you is a low-risk proposition. Have on hand a completed Business PlanManagementMarketsMaterialsMoney Copies of cash flow (12Mth) Financial statement projections (3-4yrs)
3. Learn to anticipate every question that he or she has. Remember, the combination of information and preparation is the most powerful negotiating tool in the world. A confident and thoroughly prepared borrower is four times more likely to have his or her loan approved than a borrower who does not know the answer to some of the basic questions a banker asks. To show the extent of your preparedness, your business plan should also include answers to your banker's questions.
These questions normally are:
How much money do you need? Be as exact as possible; although adding a little extra for contingencies will not hurt. How long do you need it for? Be prepared to go into detail about what the money will do for you and why your business is a good risk. What are you going to use it for? Businesses use loans for three things: to buy new assets, pay off old debts, or pay for operating expenses. When and how you will repay for it? Your cash flow projections should provide a repayment time frame. Convince the banker of the long-term profitability of your business and your ability to repay the loan by using your financial projections and business plan. What will you do if you do not get the loan? Is your request Safe and Sound.
4. Do not take an apologetic and negative attitude. Keep your negativity in check. Present yourself as an entrepreneur who can and will repay the loan. Boost your image by providing your Commercial Account Manager with any promotional materials about your business, such as brochures, ads, articles, press releases, etc.
5. Dress in a professional manner for the interview. This is a business transaction, so treat it as such.
6. Do not stretch the truth in your loan application. Broad, unsubstantiated statements should be avoided. The lender can easily check many of the facts on your application. If you cannot support statements with solid data, then don't make them.
This presentation on avoiding over-indebtedness was presented during the Microfinance Council of the Philippines Annual General Meeting entitled "Making a Difference: Multi-Stakeholder Action
Towards Responsible Microfinance" held in Manila on July 28-29, 2011.
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Improving bso services and sme performance through cleaner production
1. Improving BSO Services and
SME Performance Through
Cleaner Production
[SPEAKERS NAMES] [DATE]
2. Module 8:
Financing Cleaner
Production
8.1:
Understanding loan
approval at commercial
banks
3. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
3
Possible funding channels for CP
Commercial
Banks
Company
Shareholders
(equity offering)
Partners/
owners
Leasing
companies;
equipment
vendors
Government-subsidized
credit
• Environmental revolving
loan funds
• Development banks &
credit schemes
• Ex/Im finance guarantee
schemes
International
Development
Assistance
Internal sources
Commercial
sources
Public/ODA sources
Cash
Credit cooperatives/ reserves
unions
Customer
firms
4. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
4
Our focus: commercial banks
!
Difficulties in accessing
commercial credit are one
of the largest challenges
involved in implementing
CP capital investments,
particularly for SMEs.
Many development
organizations engaging in
SME support projects and
SMEs themselves have little
experience in dealing with
commercial banks
! ?
5. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
5
Background: Commercial Banks
Commercial
Banks:
Acquire funds by receiving
money from savers: savings
accounts, deposit accounts, etc.
Provide funds to borrowers
through term loans, lines of
credit, bonds, etc
The interest payments on loans
are used to pay interest to
depositors & are a primary
source of profit for the bank
To be profitable/sound,
commercial banks focus on:
maximising their returns &
minimising the risks they accept
6. ! Therefore:
Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
6
their principal
expertise is
evaluating borrower
credit-worthiness. . .
not the performance
of CP investments!
7. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
7
Commercial bank financing instruments
For SMEs, commercial banks offer two
main types of financing instruments:
Term Loans
Lines of Credit
Issued for a specific project/purpose
Specific amount and term (months or
years)
Interest rate will reflect risk & may be
fixed over time or variable
Can usually be used for any purpose
Approved up to a credit limit. The
customer can use any amount up to
the limit.
Higher interest rates than term loans.
Interest is charged only on credit
actually used.
1
2
8. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
8
Commercial bank loan procedures
Commercial
banks’ loan
procedures
have 4
basic
stages
Application
Review
Award
Paying
back, with
interest
applicant prepares proposal
and submits to bank
failure
1
2
3
Bank evaluates
application and sets
or negotiates
conditions
4 We will examine
at each stage in
more detail
9. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
9
Commercial bank loan procedures
Application
a. Before applying to any particular
bank, research and review
potential funding sources
b. Have initial informal discussions
with bank loan officer
c. Fill out bank’s loan application
form; obtain all necessary data
d. Submit the loan application and
supporting documents to bank.
Application
1
Establishing a personal relationship
with the bank/loan officer is very
important!
!
10. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
10
Commercial bank loan procedures
Application review and loan award
Review
Award
2
3
Review Negotiate
terms*
More information
requested
Commitment
letter
& term sheet
Loan
agreement
signed
Funds
received
Agreement
on terms?
YES
NO
*Terms include, e.g. interest rate,
repayment period & collateral
Review
and award
involve the
following
steps:
Application
11. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
11
Commercial bank loan procedures
What is the basis of the bank’s review?
The bank’s review of
the application is
focused on two
distinct aspects of
risk:
economic viability of the
specific project
the financial/economic
status of the enterprise as
a whole
Often more important!
12. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
12
Basis of Review #1
Economic viability of the project
How does the bank assess
the economic viability of the
project? ?
NPV is the mostly commonly
used overall indicator.
HOWEVER,
the bank will calculate multiple
values for NPV using different
assumptions regarding the
performance of the project
E.g. what is the
effect on NPV of
different sales,
savings,
schedules?
13. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
13
Basis of Review #2
Company financial and economic status
How does the bank assess
the enterprise’s financial and
economic status? ?
The bank assesses 3 Key factors:
LIQUIDITY
Is there cash on hand to pay day-to day operating
expenses?
SOLVENCY
Does the company have the ability to repay
outstanding long-term debt?
Prospects for future PROFITABILITY
and its implications for both liquidity and
solvency over the expected term of the loan.
14. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
14
Barriers to
Commercial Bank Finance for SMEs
Small size of SME CP Projects
Means that the bank’s
administrative costs are very high
compared to the profit it can make
on the loan
High perceived risk of lending
to SMEs
Insufficient accounting and
business documentation (poor
record-keeping)
Limited banking track record (no
history of obtaining and
successfully repaying loans)
Lack of security (collateral)
For SMEs,
access to CP
finance is
constrained
by:
15. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
15
It is true that
some barriers to commercial bank loans
and (other CP financing) cannot be
addressed by the SME alone
!
BUT SOME
BARRIERS CAN
BE ADDRESSED
16. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
16
What can SMEs do to address these barriers?
Understand banks’ decision criteria
and analyse CP projects in these
terms
Improve record-keeping and
management systems (utilize BDS
services if available)
Identify banks that do have SME
lending programs; request an
informational interview with a loan
officer before applying
17. Module 8:
Financing Cleaner
Production
8.2:
General trends in CP
financing in developing
areas
18. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
18
“Friendly trends” in commercial banking
We have now discussed
many barriers to financing
CP projects at SMEs
HOWEVER, THERE IS
GOOD NEWS.
Some current trends
in commercial banking
are “friendly” to CP
financing:
Increasing similarity among
financial institutions
Expanded commercial bank
activity in developing
countries
Increasing interest in
sustainable banking
19. Increasing similarity among financial institutions
Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
19
Traditionally,
different types of FIs
specialized narrowly
in their own areas.
This is still true to
some extent, but
becoming less so.
Many FI’s are
expanding their
product-ranges into
others’ areas
for borrowers, result is a wider
range of potential sources of
finance
Be prepared to approach
several different FIs of different
types to raise finance on
attractive terms
!
20. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
20
Sustainable Banking
FI’s are becoming
more aware of
their
environmental
responsibilities in
lending. This
emerging trend is
focused in
developing
countries
Thus, at many international
banks, we see a shift. . .
Passive with respect to
environmental issues.
Resist responsibility for
environmental impacts of
projects they finance
Reject financing of
environmentally
damaging projects.
Recognize business
& social benefits of
environmental
investments
From traditional
passive attitudes. . .
. . .to “sustainable
banking”
21. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
21
Policy & development approaches
to overcome finance barriers
Business development service
providers can work with
SMEs, particularly to improve record-keeping
FIs, to demonstrate that CP investments
pay
Special financing facilities for SMEs
and for CP investments
Civil Society & business
associations: Lobby Government for
supportive policies
23. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
23
This presentation to be developed specifically for
the host country context
24. Module 8:
Financing Cleaner
Production
8.4:
Participants’ experiences
in financing projects.
25. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
25
Group Exercise:
Analyzing past funding experiences
You will identify one or more past funding
experiences to CHARACTERIZE and
ANALYZE, answering the questions on the
following slides.
See exercise instructions
in sourcebook
26. GROUP
EXERCISE
Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
26
Past funding experiences
Analyze your funding experience by addressing the
following questions:
? The basics:
What was the project?
? The financing search:
Which sources of finance were considered?
Which sources were then approached?
? The application:
What information was required to make the application?
Could you provide this information? AND
27. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
27
Past funding experiences GROUP
EXERCISE
? The review:
What were the funder’s criteria for approving or rejecting
the application? Were these clear?
Did any problems arise during the review process?
? The outcome; terms and conditions:
Was financing obtained?
What were key terms and conditions?
! Lessons learned:
What do you think is the reason for your
success/failure? What did you do right? What
would you do differently? What advice can you
offer from this experience?
Do you still have unanswered questions from
this experience?
28. Past funding experiences GROUP
EXERCISE
Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
28
GROUP PRESENTATIONS.
29. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
29
Some lessons learned
by participants in past courses
PROBLEM Solutions that worked
! Project
profitability is
poor
Re-evaluate profitability using total
cost principles
! management is
unable or
unwilling to issue
more shares or to
raise debt
Lease capital equipment rather than
purchase it.
! the firm does not
have contacts
with commercial
banks
Make contacts through the chamber
of commerce, BDS provider,
accounting firm
30. Some lessons learned
by participants in past courses
Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
30
General Advice
Rejection from one FI indicates little.
Search widely for alternative sources of
finance. The larger the number of
possibilities you consider, the more likely
you are to obtain financing... and on better
terms
If you are rejected, apply again when the
national economic situation improves/
credit is loosened.
Seek advice from experts and from
contacts in other firms
31. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
31
? Do we agree with these
lessons learned?
What lessons learned can
we add? ?
Are these lessons fully
relevant to CP financing? ?
32. Improving MSME Performance through Cleaner Production.
Module 8: Financing CP. Visit www.encapafrica.org.
32
Point for discussions
Editor's Notes
These are, broadly, the main sources of finance which are usually available to firms for project finance. The firm’s business environment is the main determinant of which sources are most relevant.
Internal funds can be generated by retained profits or capital supplied by the owner(s) of the firm.
There may be several external private-sector sources, including other firms with whom the firm does business, who may be prepared to help with finance in order to protect their own interests. These may be suppliers of capital equipment, or finance companies associated with them (which could be through leasing arrangements), or suppliers and customers in the firm’s normal day-to-day business.
Finally, the government can be a important supplier of capital to finance projects [mention any topical examples of current local programs].
Different institutions will weight differently the various criteria for making a loan. For example, a commercial bank will probably put highest importance on their assessment of the firm’s ability to pay interest and eventually to repay the loan (i.e. the bank’s risk of the firm defaulting), and on the return they earn on the loan (the interest which they charge). A development bank may be prepared to accept higher risk and a lower return provided that the project meets some specified economic development criteria.
Note that credit unions are intermediate between “commercial” and “internal” sources, as only members can borrow from credit unions.
A commercial bank provides a kind of marketplace within which, indirectly, savers who wish to invest their money safely but still earn a return on it can transfer it to borrowers who wish to raise finance, e.g. for company projects.
The bank is rewarded for providing this service through the profit margin that it realises between:-
- the low rate of interest that it pays to savers
- the higher rate that it charges to borrowers
In principle this could be achieved by the savers lending their money directly to borrowers. This would avoid the costs of operating the bank, and the bank’s profit margin. However banks add value to the process in several ways:-
- scale: they can combine several small savings accounts and deposits into a larger sum, sufficient to finance a company project
- duration: they are able to raise money from savers on short-term terms, so that savers retain liquidity, but make advances to borrowers on long-term terms
- location: by raising money from areas or countries where savers exceed borrowers and transferring it to areas/countries where the opposite is the case
- developing expertise in assessing risks by specialising in this skill
Banks’ key concern is risk - if they consider that a particular company is more risky than the average, they may:-
- add a risk premium to their lending rate and increase the cost of the loan to the company
- insist on restrictions on the loan, for example to require security such as a mortgage on some of the company’s assets, to provide collateral
If their assessment of risk is too high, they may refuse a loan altogether.
Banks therefore become expert in assessing the risks of companies, and any possible extra risk posed by a proposed new project. Companies can increase their chances of success in loan applications by providing assurance to banks that they represent only low risks.
In economies where several banks compete with each other, the rates charged will tend to be lower since the banks have to compete with each other for borrowers (as well as for savers), though a basic minimum will be set by the base rate set by the government or the central bank. Banks may differ in their evaluations of risk and their readiness to accept greater risk in return for charging a higher interest rate, so companies should be ready to approach several banks to find the best offer available.
These are the two main ways that banks provide finance to small and medium-sized companies, i.e. the banks’ “products”.
A term loan is for a specific period, and must be fully repaid by the end of the period. This may be either a single amount at the end, or (more usually) in instalments over the period of the loan. The interest rate is set when the loan is agreed, either at a definite rate throughout the period of the loan, or variable on a pre-defined basis such as in relation to the national base rates set by government or the central bank.
Lines of credit (or “overdrafts”) are facilities by which companies can “draw down” as much as they need, up to a set limit, and pay for only what they use. The interest rate is usually higher than for term loans. Although they may be guaranteed for a set period, they can often be repayable on demand by the bank, so are not suitable for companies who wish to finance large-scale projects that require capital for a long period.
Generally, term loans are likely to be more suitable to finance investment in fixed assets, whereas lines of credit are suitable for financing investments in short-term working capital (inventories, debtors etc.) which may fluctuate seasonally over time.
Each bank will set its own detailed procedures by which companies can apply for finance, within this broad overall framework.
This slide distinguishes between three stages in the process:-
application: this is done by the company, so the speed with which this can be completed will be to some extent under the company’s own control. One source of delay can be the need to collect together all the information that the bank requires. Companies which have already set up good accounting and other information systems will be able to prepare and submit applications more quickly.
Review. The bank will then evaluate the application and make a decision. The time that this will take will depend in part on how accurately and completely the company has completed the application. If there are gaps in this, the bank may have to come back to the company to request what it needs, which could cause further delays.
These are the main steps in a typical loan application and approval process, although the details will differ between different banks, and perhaps between different types of project. [The list of steps continues onto the next slide as well].
It is valuable already to have a good working relationship with a bank, and previous personal contacts with their senior staff, in order to build up an impression of business ability and financial reliability. The first bank to approach will obviously therefore be the company’s main banker, with whom it keeps its current account.
At the same time however, it is sensible to approach other banks as well, in economies where there is sufficient competition in the banking sector to make this possible. If each bank is aware that the company is considering a number of different banks, this will help to encourage them to make attractive their own offer to the company.
To assess the financial position, the bank will want to review the economic feasibility of both:-
- the specific investment project which is being proposed
- the company as a whole.
The latter will usually be the more important, since the liability due to the bank will be from the company as a whole, not a single project. Even if this project is unsuccessful, the bank can still demand repayment from the company’s other resources, provided the company as a whole is financially sound.
Calculating different values of NPV for different assumptions is called sensitivity analysis.
Assessing the viability of the company as a whole is less straightforward since there are several factors that can affect this.
This slide lists the main questions about the company’s financial strength on which the bank will want to seek assurance. These are:-
- liquidity - the ability to pay for its day-today operating expenses, e.g. payments to its suppliers, payments and utility bills.
- solvency - the ability to repay, as they fall due, any long-term debts which are outstanding.
- profitability - since if this is negative (i.e. if the company were trading at a loss) then over time this would erode its liquidity and solvency.
It is what will happen to these factors in the future that matters, but this can only be estimated. Guidance on this, from what has happened in the past, may be obtained from the company’s accounts. These can be used to derive a number of indicators (or ‘ratios’) which reflect liquidity, solvency and profitability. These are also covered in Separate CP finance courses.
This slide sets out the reasons as given by FIs as an explanation to their reluctance to lending to SMEs.
SMEs can overcome some of these challenges by registering with local Business Development Service Providers to receive training in record keeping.
There are a number of trends in commercial banking that may help companies wishing to raise finance for cleaner production investments.
These are expanded on, in more detail, in following slides.
There are a number of trends in commercial banking that may help companies wishing to raise finance for cleaner production investments.
These are expanded on, in more detail, in following slides.
Traditionally, different types of FI have tended to specialise in different sections of the market, and have offered distinctly different products. However, in recent years there has been a trend for companies to broaden their product ranges and to offer products that previously were offered by other types of FI.
A COUPLE OF EXAMPLES HERE?
For would-be company borrowers this means that there is a wider range of potential sources of finance, and companies should be ready to approach several different FIs, of different types, in order to raise finance on the most attractive terms.
The trend to ‘sustainable banking’ is still very new, and mainly limited to banks in developed countries who wish to appeal to environmentally-conscious customers. However, it is possible that this could provide a further source of finance, on attractive terms, for companies wishing to finance cleaner production investments.
This slide defines sustainable banking and refers to the landmark UNEP declaration that 118 banks have voluntarily signed, to recognise their responsibility to contribute to sustainable development and express a commitment to this.
A progression can be defined, from the traditional attitude of banks to the environment, to more progressive attitudes.
The traditional attitude can be described as ‘defensive’, with a reluctance to accept responsibility, and a tendency to react to possible new environmental legislation by lobbying against it. This attitude is probably still typical of a lot of the banking sector , but a number of banks are moving towards a more progressive approach [go on to next slide].
Sustainable Banking’ is an ideal, rather than something which any existing bank can be claimed to have fully achieved. This recognises that banks have a considerable potential to impact the environment, not only through their own banking operations but even more through their influence on the companies to whom they lend.
This is recognised to be not only environmentally responsible but also good banking practice, since environmentally responsible investments such as Cleaner Production projects are likely to carry lower risks than other projects. For example, it is less likely that a project will have to be abandoned before the end of its full economic life due to tighter environmental legislation and regulation.
This and the next slide list a number of issues and problems that can arise. Participants should share with their groups their past experiences related to these issues. It may be most effective to focus on a particular firm which is represented in the group which has had a particularly interesting and informative experience. Ideally, the perspective of both the fund applicants and the provider of capital should be presented in the experiences.
Participants should be encouraged to consider not only project finance applications that were successful, but also those which were not, either because the application was rejected or because it did not even get to this stage since in the end the firm decided not make any application.
The final bullet is on the criteria that were applied by the potential sources of finance. These may not have been clear to the firms - what is wanted here is what the firms’ perceptions of what the financiers were looking for. This may provoke some helpful comments from participants from financial institutions, and provide material which the banker can later address (if he/she is not yet at the course, the instructor should make notes on the comments made by participants to pass to him/her later).
Terms and conditions” refers to interest rates, payback period, AND everything that the financier could require of the firm after the application has been approved and the finance has been granted. This could include requirements on:-
- when and how the money should be spent
- how the firm implements the project, e.g. any requirements concerning how a project management team is set up
- information that the firm has to provide to the financier during the period that the finance is still outstanding.
This last could include information either or both:-
- the firm as a whole, e.g. its annual financial reports to demonstrate that it is in good financial health
- developments with the specific project
Lessons learned are the crucial questions - the conclusions that can be drawn from the experience which can help to inform and improve future project planning.
The final question is particularly important - what gaps in knowledge by the firm did the experience demonstrate, which still remain unanswered? (The trainer should note these and report them to the banker, so that he/she can address them later).
These are obviously not the only solutions to the problems identified. Hopefully, the group presentations will have suggested others.
Past courses bear out that this general advice is frequently relevant. Hopefully, these points were raised by the group presentations as well.
1. It is worth approaching a wide range of different possible sources, both commercial and non-commercial. Even within a single sector there can be differences between institutions which do not reflect the attractiveness of the project. For example, one bank may refuse a project, or offer finance only on unattractive terms, simply because it is already over-committed in that sector, for which another bank would be happy to offer finance.
2. the availability of finance, on acceptable terms, may vary from time to time (and also from country to country) depending on the current state of the economy. Even if a project fails to attract finance when the economy is in recession, it could still be worth trying again when the economy improves.
3. There are several sources of independent advice on potential sources of finance, including the local accountancy profession, other business advisers, chambers of commerce and industry associations, and contacts from other firms (participants may be able to suggest more). Firms are well advised to build up and maintain databases of potential sources of advice even if there is no immediate needs for finance, in order to be able to move quickly if and when the situation does arise.