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How May Banks Address the Constraints and Perceived Drawbacks to Financing SMEs?

In: A Guide to SME Financing

Author

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  • David Munro

Abstract

SMEs often lack adequate financial records, have insufficient collateral, and non-professional management (they are often family enterprises). Unless a cost-conscious lending methodology is adopted, transaction costs can exceed earnings on the small loans many SMEs require. Mitigation strategies for these risks are discussed at length, including instructions on how to assemble financial statements using account turnover information and industry averages. These approaches are part of the template-driven methodology advocated in the Guide. Elements of the semi-automated approach are described in detail within the context of a risk-mitigation strategy.

Suggested Citation

  • David Munro, 2013. "How May Banks Address the Constraints and Perceived Drawbacks to Financing SMEs?," Palgrave Macmillan Books, in: A Guide to SME Financing, chapter 3, pages 18-31, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-37378-6_4
    DOI: 10.1057/9781137373786_4
    as

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