From 10 Sep 2018 to 14 Sep 2018    Workshops Package "Bank Management : Key Operational Aspects" Risk Management in Banking    in Vietnam : place to be defined by organising counterpart / Vietnam

SME Financing: Strategy & Organization for Banks

In collaboration with BBA - Belgian Bankers Academy

Many very small and medium sized enterprises are often obliged to finance their current activity and development by internal funding, coming from their owners or by retained earnings. For the business cycle financing, external funding is mainly provided by their suppliers.

For many reasons, the intervention of external capital providers is difficult. Between VSME and financial institutions, experience shows indeed it is not easy to understand each other. If the relations are relatively easy when it concerns the financing of a well-defined short term need, they become rapidly difficult when the demand is related to a business project comprising investment and working capital.

Entrepreneurs, especially small ones and those who are developing a new project, generally blame the bankers for their chilliness, lack of understanding, and their desire to get the maximum guarantees. As for financial institutions, they often blame contractors to submit projects that are insufficiently documented, or unrealistic in terms of financial planning.

Objectives

Given the crucial role of these enterprises, corresponding to the concept of “mesofinance”, in economic development, and the importance of this market for the growth of the banking industry, the objectives of the seminar are:

  • to improve the technical and commercial expertise of the participants in their relations with SMEs applying for a loan to finance the development of their activities;
  • to improve the understanding of what is a “bankable” credit demand on the basis of a business project and a business plan;
  • to improve the understanding of the key words in SME financing: “Information” – “Treatment of information” – “Use of information”;
  • to focus on recent non-banking development, like crowdfunding, business angels and private equity funds.

Methodology

Cash Flow Based Lending will be the main focus, through comprehensive case studies, exercises and exchanges of experience.

Target audience

Middle managers and high potentials from commercial & central banks, financial institutions and supervisory bodies, with a minimum of 3 year experience in SME financing.

More specifically for participants active in commercial banks:

  • Loan officers in charge of commercial relations with SME prospects and clients
  • Credit risk analysts
  • Staff in charge of middle and back office activities

Knowledge assessment

Participants will have their newly acquired knowledge validated through an individual exam (multiple choices and open questions) and group presentations.

Location & Duration

In Luxembourg: 5  days.

in HoT-ATTF partner countries: 3 days.

Detailed programme Explode

Introduction

SME Financing: Main pieces of the puzzle – Key words

Strategy & Internal Organization for banks

SME market

  • Challenges – Risks – Opportunities
  • Marketing & Commercial approach: technical skills
  • Collateral based lending vs cash flow based lending

Business Plan SMEs

  • Expected content
  • Who? What? Where? Why? For whom? How?
  • From business plan to pro forma financial statements & financial projections
  • Case study

Financial analysis

  •  Financial statements
  • Working capital & Working capital requirement
  • Cash flow
  • Exercises

Credit analysis

  • From traditional credit analysis to formalized models
  • Scoring – Rating tools
  • Collateral: Public Credit Guarantee Schemes for SMEs

Investment projects: some usual valuation methods

Valuation of a company: DCF method - Example 

Internal organization

  • From Introduction to Credit decision
  • From Credit decision to Credit disbursement
  • From Credit disbursement to Final reimbursement

SME loan monitoring

  • Sources of SME failures & Warning signals
  • Problem loan management & Recovery strategies

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