1 / 1

Banks are lending to Low/ Medium risk SMEs

Banks are lending to Low/ Medium risk SMEs The challenge is to determine which weakened SMEs can be supported back to viability . The SME side. The Banks’ side. Bank Boards’ Credit Risk Appetite & Bank Lending Policies. SMEs Condition – the main variables. Going Concern. Solvency.

jadzia
Download Presentation

Banks are lending to Low/ Medium risk SMEs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Banks are lending to Low/ Medium risk SMEs The challenge is to determine which weakened SMEs can be supported back to viability The SME side The Banks’ side Bank Boards’ Credit Risk Appetite & Bank Lending Policies SMEs Condition – the main variables Going Concern Solvency Maximum Gearing Minimum Security Cover How Much New Lending does each Bank Want? • Management Capability • In this business • As General Managers SMEs Capital Account/Reserves How much risk will bankstake unsecured Banks’ -V – Others’ Stake in the project • Any failed Investment plays? • In SME or Promoters Names • Failed Buy to Lets • Business Investment in better timesCan these be ring-fenced from the core business to determine future viability? Trading Book - Level/Quality of stock- Level/ Quality of Debtors- Level of Creditors- Any Credit Defaults? How much Exposure to each sector? & each locality? The quality and realisability of any security offered Profit/ Trading PerformanceHistoric-> Downturn ->Present -> Future- Any ‘Killer Apps’ threats Bank Boards’ Credit Risk Appetite If it was a good business in the past, could it not be a good business in the future Constraints through Banks’ Lending Policies Any there any Non Bank Sources of Finance?Government/ Non Government - To enable the bank to part finance the deal- To remove the need for bank finance • * After • Capital replacements costs • Increased working capital costs • Any decrease in capital allowances • KEY= Cashflow/ EBITDA • ‘sufficient future free cash’ * to make projected repayments • Are the projections credible? Key Question : Will the Bank (or Other Investors) Lose Money on this Loan in the foreseeable future? SME Viability / Potential Viability Access To Finance

More Related