Reunova L.V. Trends in the development of the lending market for small and medium-sized businesses in the Republic of Adygea

The lending market for small and medium-sized enterprises (hereinafter referred to as SMEs) in Russia in recent years has been developing at a faster pace than in the US and UK, and consistently exceeds the growth rate of the corporate loan portfolio as a whole. This allows us to say that the direction of loans for SMEs in Russia is quite promising.

High rates of development of the SME lending market are predicted

According to the Central Bank of the Russian Federation, SME debt increased steadily in 2009–2013, while the share of overdue debt increased in 2010, was generally stable in the period 2010–2012, and decreased in 2013.

Figure 1. The growth of SME debt is not associated with a decrease in the quality of loans and an increase in overdue debt.

Source: Central Bank of the Russian Federation

According to the forecast of the international rating agency Moody's "Lending to small and medium-sized businesses in the Russian Federation: growth supports profitability, but cyclical credit risks remain" by 2015, the total volume of bank loans to SMEs will stabilize at 15% of GDP (compared to 10% in 2012 year).

Ernst&Young predicts active growth of certain credit products for SMEs - factoring and microcredit.

Thus, factoring is the fastest growing market for credit services for SMEs in Russia. In 2012, its share in GDP increased to 2.3% (from 1.6% in 2011). The share of the SME sector in new transactions (2012) is about 40%.

Figure 2. Ernst&Young forecasts factoring growth for SMEs at 56% per year.

Expert RA's estimates are less optimistic due to the fact that already in the first half of 2013, the growth rate of the entire factoring market slowed down to 38% and the current macroeconomic situation will continue to contribute to their decline. However, in absolute terms, market growth decreased slightly (230 billion rubles, instead of 250 billion rubles for the same period a year earlier) and Expert RA predicts factoring growth at the level of 35–40% in the coming years.

The segmentation of factoring services in Russia according to Vnesheconombank as of 2013 is as follows: 63.3% of the factoring market is occupied by internal factoring with recourse, 34.9% – internal factoring without recourse and 1.8% – international factoring.

In 2012, the total portfolio of microfinance organizations was 48 billion rubles with an annual growth rate of 30%. The share of the SME segment in this portfolio was 54% or 26 billion rubles in absolute values. Ernst&Young predicts the growth of microfinance volumes for SMEs at an average rate of about 52% per year. Expert RA estimates are similar: 45–50% in the coming years. At the same time, according to NAUMIR forecasts, the “gray” segment of microfinance in 2014 will decrease from 50% to 10% of the market, which could lead to an even more significant growth in microfinance.

Figure 3. Ernst&Young forecasts microfinance growth for SMEs at 52% per year.

Source: Ernst&Young “Small and medium-sized businesses in Russia: sources of financing”

3 key factors for the development of the SME lending market

The high development potential of the SME lending market is due to the following key factors:

• low penetration of the segment with credit services and high potential for growth in SME demand for credit products;
• implementation of state programs for the development of SME lending;
• development of credit brokerage.

Low penetration of the segment into credit services and high potential for growth in SME demand for credit products

The low penetration of the segment by credit services and the high potential for growth in SME demand for credit products can be said due to the following key reasons:

A separate issue is the recovery of SMEs after the crisis. The dynamics of growth in the total volume of loans provided, analyzed in Figure 4, suggests that the SME segment began to recover from the crisis faster than large companies.

Figure 4. Before and after recovery from the consequences of the crisis, the growth rate of the total volume of loans provided for Russian SMEs is higher than for large businesses.

Capital companies are characterized by similar dynamics of the studied indicators. But in the city of Moscow, the recovery of large companies after the crisis is more noticeable, and the growth rate of SME lending in general is slightly higher, which is due to the high level of financial activity in the capital region.

Figure 5. Before and after recovery from the consequences of the crisis, the growth rate of the total volume of loans provided to SMEs in Moscow is higher than for large businesses.

Source: calculations of ANO "NISIPP" based on data from the Central Bank of the Russian Federation

At the same time, certain segments of SMEs recovered much faster than others or did not feel a significant negative impact of the crisis. According to the Kommersant information resource, the most successful companies in the crisis were the following categories:

• industries with growing government orders;
• sectors that develop as free cash in the hands of the population grows;
• debt collection services;
• anti-crisis corporate services that help reduce costs;
• consumer markets with low sensitivity to fluctuations in demand.

According to a study by ANO "NISIPP", high growth rates in key performance indicators after the crisis (2009–2010) were demonstrated by Moscow SMEs in the following types of activities:

• wood processing and production of wood and cork products, except furniture;
• chemical production;
• metallurgical production;
• production of finished metal products;
• production of cars, trailers and semi-trailers;
• processing of secondary raw materials;
• trade in motor vehicles and motorcycles, their maintenance and repair;
• air transport activities;
• activities of public associations.

The share of loans to SMEs was at a relatively low level after the crisis - 18% in Russia and 12% for the city of Moscow. Currently, this figure is 25% in Russia, and 16% in the city of Moscow.

The reason for this difference is that there is a high concentration of large companies in the city of Moscow, and they have been the key priority of most Moscow banks for a long time. Moreover, this indicator indicates, rather, the development of lending to large businesses in the capital, rather than the problems of lending to SMEs. As of January 1, 2014, 26% of the volume of loans issued to SMEs and 41% of loans issued to large companies are concentrated in the city of Moscow, which is the highest figure for the regions of Russia.

Investments of SMEs in fixed capital, which characterize the development potential of companies in 2009–2012, taking into account inflation, are generally stable in Russia as a whole and showed high growth rates in the city of Moscow.

Figure 6. Investments in fixed assets of SMEs in Russia, taking into account inflation, are generally stable.

Source: gks.ru data, collections “Small and Medium Enterprises in Russia”

In the city of Moscow, investment in fixed assets of SMEs grew at a faster rate during the period under review.

Figure 7. SME investments in Moscow have shown steady growth since 2010 (adjusted for inflation).

Source: Rosstat data, assessment by ANO "NISIPP"

Also, the growth of SME demand for credit products in Russia is supported by the emergence of new companies. Thus, the number of companies in the register of legal entities is steadily increasing (Figure 8), as well as the number of new business companies created annually is increasing: 2011 – 361 thousand, 2012 – 398 thousand, 2013 – 411 thousand.

Figure 8. The number of created legal entities, the entry of which is included in the Unified State Register of Legal Entities (except for those that have ceased operations), is increasing.

Source: Federal Tax Service data

Implementation of state programs for the development of SME lending

State support for SME lending is quite extensive and may vary depending on the region of Russia. Thus, in the city of Moscow, such support is provided in four main areas:

• SME Bank programs;
• program of the Fund for Promotion of Lending to SMEs of the City of Moscow;
• program of the Fund for Assistance to the Development of Microfinance Activities;
• thematic government programs to provide SMEs with benefits when receiving loans.

SME Bank interacts with banks and organizations that provide loans to SMEs. At the same time, the scale of SME Bank’s activities both in Russia as a whole and in Moscow is growing steadily.

Figure 9. The growth rate of the volume of loans issued by SME Bank to SMEs in the city of Moscow exceeded the figure for Russia as a whole.

Source: data from MSP Bank OJSC

The activities of SME Bank extend to all 83 regions of the Russian Federation, including affecting 168 of 342 single-industry towns. The average rate of loans issued to SMEs by partner banks of SME Bank as of February 2014 was 12.7%, which corresponds to the level of 2013. At the same time, lending to SMEs in the field of modernization, innovation and energy efficiency accounts for 58% of the support provided.

The activity of the Moscow SME Lending Fund is to provide guarantees when SMEs in Moscow receive loans. The fund's activities are characterized by positive feedback from SMEs, and the fund's available resources are in high demand. At the same time, the scale of the fund’s activities has been increasing quite steadily over the entire period under review, as can be seen in Figure 10.

Figure 10. The total volume of guarantees from the Moscow SME Lending Fund for SME obligations in 2009–2013 grew at an average rate of 14%.

Source: data from the Moscow Small Business Lending Fund

An example of the fund’s successful activities is the company Alfapak LLC, which produces packaging materials. During 2010–2013, the company received loan funds from OJSC Nomos-Bank in the amount of 9.5 million rubles with a guarantee of 4.74 million rubles, using the support of the fund. Loan funds were used for the purchase of raw materials, while in 2012, Alfapak LLC purchased five new trucks on lease, which made it possible to optimize logistics and reduce the need for warehouses. The company's management is confident that it was the support of the fund that had a key impact on the company's success. And this example is far from the only one shown by the fund.

Similar funds exist in other constituent entities of the Russian Federation, examples may be the “Guarantee Fund for Assistance in Lending to Small and Medium Enterprises of the Udmurt Republic”, “Fund for Assistance in Lending to Small and Medium Enterprises of the Tver Region”, “Fund for Assistance in Lending to Small and Medium Enterprises of the Tambov Region” and etc. According to Vnesheconombank, as of February 2014, the system of regional grant funds in Russia provided 37 thousand loans totaling more than 230 billion rubles.

The “Fund for Assistance to the Development of Microfinance Activities,” created in 2012, is aimed at facilitating access for Moscow SMEs to short-term financial resources of relatively small volumes. The Fund provides loans for the purpose of further financing of small and medium-sized businesses to microfinance organizations and credit consumer cooperatives. At the same time, the fund identifies 16 types of activities of SMEs, lending to which is a priority and is carried out on preferential terms:

• production;
• innovation sphere;
• Department of Housing and Utilities;
• social sphere (work with children, pensioners and disabled people);
• education;
• healthcare;
• physical Culture and sport;
• transportation;
• domestic tourism;
• hotel services;
• consumer services;
• handicraft;
• Agriculture;
• landscaping;
• youth entrepreneurship;
• social entrepreneurship.

Thematic government programs for providing SMEs with benefits when obtaining loans include subsidies for reimbursement of interest on loans provided by the Moscow City Donetsk People's Inspectorate through the State Budgetary Institution Small Business of Moscow. In accordance with this program, SMEs can receive compensation for the costs of paying interest under a loan agreement for the purchase of fixed assets or modernization of fixed assets:

• up to 5,000,000 rubles;
• no more than the refinancing rate for 3 financial years.

Development of credit brokerage

Credit brokerage is a separate factor in the development of SME lending. Most SMEs experience difficulties in obtaining loans due to the following factors:

• many managers of SMEs do not have an economic education;
• New companies have no experience in obtaining loans.

The situation in which the head of an SME does not have an economic education is quite common. For example, in the city of Moscow, more than half of SME managers do not work in their specialty.

Figure 11. Only 43% of Moscow SME managers confidently answered that they work in their specialty.

The volume of loans to small and medium-sized businesses in Russia in 2017 increased by 15% against the backdrop of lower rates and preferential government programs, Expert RA found out. Since the 2014 crisis, lending to SMEs has been declining for three years

Photo: Kirill Kukhmar / Kommersant

Signs of life

In 2017, Russian banks issued 6.1 trillion rubles to small and medium-sized enterprises. loans - this is 15% more than in 2016, according to a study by the rating agency Expert RA (available from RBC), dedicated to lending to small and medium-sized businesses (SMEs). The sector is showing growth for the first time since 2013, the volume of issuance is the largest in three years, however, SME lending in Russia has still not reached pre-crisis levels: at the end of 2013, 8.1 trillion rubles were issued to SMEs. loans.

Based on data from the Central Bank, the SME loan portfolio in the Russian banking sector has been declining for the fourth year in a row - minus 7% at the end of 2017 (to 4.2 billion). But Expert RA calculated that the negative dynamics were due to changes in the register of small and medium-sized businesses in August 2017. Because of this, more than 600 thousand organizations, some of them with a credit load, ceased to be considered SMEs. If not for this circumstance, the loan portfolio would also have grown for the first time since 2014 - to 4.9 trillion rubles, the authors of the study calculated. The volume of the loan portfolio is less than the volume of loans issued due to the predominance of loans for up to one year in the SME market.

The Expert RA study is based on official statistics from the Central Bank, the results of a bank survey, as well as in-depth interviews with participants in the SME lending market (representatives of 47 banks were interviewed).

Which businesses in Russia are classified as small and medium-sized?

There is a legislative definition for small and medium-sized businesses in Russia. Micro-enterprises should employ up to 15 people, small enterprises - up to 100, medium enterprises - from 100 to 250 people. To be included in the SME group, there are restrictions on revenue - 120 million, 800 million and 2 billion rubles. for micro, small and medium enterprises respectively.

The main reason for the upward trend in the SME lending market is the reduction in interest rates on loans for this category of enterprises. The weighted average rate on long-term loans in this sector decreased over the year from 14.2 to 10.9%, for short-term (up to one year) - from 14.8 to 12.4%.

In addition, in 2017, individual entrepreneurs received access to the already existing state program for lending to SMEs (at 6.5% per annum). Finally, the government approved a new program under which loans to SMEs operating in priority industries will be subsidized from the federal budget at 6.5% per annum (currently real rates on preferential loans are 9.6-10.6% - preferential rate plus bank margin in the amount of 3-4 pp). Priority sectors include agriculture, manufacturing, construction, transport, communications, tourism, healthcare and waste management.

According to Expert RA, not only the volume of lending has increased, but also the number of submitted and approved applications for SME loans. The first indicator is growing by one and a half times for the second year in a row (based on a survey conducted by a rating agency among banks), and the number of actually concluded contracts at the end of 2017 also increased by one and a half times after a decrease a year earlier.

Market for state banks

Considering that state programs remain the main driver of growth in SME lending, banks that are not among the largest have fewer and fewer opportunities to compete in the market for loans to large enterprises. At the end of 2017, the share of SME loans issued by banks from the top 30 by assets reached a historical maximum of 66% (in monetary terms, the SME loan portfolio of the largest banks amounted to RUB 2.8 trillion). The total volume of loans issued by banks from the top 30 to small and medium-sized enterprises in 2017 showed explosive growth - plus 34%, up to 4 trillion rubles. (such dynamics have not happened since 2011).

The leader in SME lending in 2017 was Sberbank - the largest Russian bank virtually single-handedly ensured the growth of the sector in 2017 (without taking into account Sberbank’s indicators, the total portfolio of SME loans would have decreased by 14%). The State Bank increased its SME loan portfolio by 17%, and the volume of loans by 60%. Also in the top 5 largest creditors of small companies at the end of 2017 were VTB, Moscow Industrial Bank, Bank St. Petersburg and Alfa Bank. The fastest growing loan portfolios were Mosoblbank (four times), Russian Capital (plus 174%) and SMP Bank (plus 104%).

In the case of small banks, the situation is exactly the opposite. Over the year, the volume of loans issued to SMEs decreased by 9% (to 2.1 trillion rubles), the loan portfolio - by 24%, to 1.4 trillion rubles. (minimum since 2011).

There are several reasons for the leadership of large banks - they more often participate in state support programs and are more active than small banks in offering preferential terms for debt refinancing to SME borrowers.

What do they borrow for and when will they be paid back?

In 2017, more than half (51%) of loans issued to small and medium-sized businesses were in the trade sector. Banks traditionally lend to this sector most willingly, notes Expert RA. 14% of loans each went to small enterprises in the manufacturing and construction industries, 6% to insurance and financial SMEs. Agriculture in the overall structure of SME lending looks modest (share of 3%), however, participants in the Expert RA survey note an increase in lending to this industry, and some banks (VTB24, Ak Bars, Raiffeisenbank) increased the share of loans in this area by 49- 68%.

Mostly, small companies borrow for a short period of time (up to a year) - they need money to finance working capital and eliminate cash gaps. However, as Expert RA notes, in 2017 the share of loans for investment projects to small and medium-sized businesses (that is, for a period of more than three years) exceeded pre-crisis indicators, reaching 18% of the total lending volume.

SMEs are still the most unreliable borrowers. The share of overdue debt in the SME loan portfolio is 14.9%. This is much higher than retail loans (7%) and loans to large businesses (5%). They mostly do not repay debts to banks not included in the top 30—their share of overdue debt in this group reaches 21.7% (increased by 6 percentage points over the year).

Growth will continue

“Expert RA” predicts that with stable oil prices, inflation and the continued reduction of the Central Bank key rate, the SME loan portfolio in 2018 will grow by 15%, to 4.9 trillion rubles. (the agency uses official statistics from the Central Bank as its base). At the same time, banks will not rush to ease lending conditions: only 14% of banks participating in the Expert RA survey are ready to take such a step. The rest either do not intend to change approaches to assessing borrowers (57%) or will tighten them (29%).

The main growth in SME lending in 2018 will come from large banks, which will increase credit limits for the highest quality borrowers, Alexander Saraev, managing director for banking ratings at Expert RA, told RBC. The group of SME borrowers with an average level of risk, which medium and small credit institutions traditionally work with, will continue to experience significant limitations in borrowed resources. According to Saraev, it can be expected that, against the background of a decrease in risk appetite among medium and small banks, the funding gap for a wide range of SMEs will increase, despite the overall market growth.

The SME lending market has prospects only for companies that have sufficient and stable account turnover, says Fitch senior analyst Alexander Danilov. Only in this way can the banks that service these companies more or less reliably assess their solvency, while their reporting is uninformative. “For clients on the street, getting a loan will be problematic - banks are reluctant to do this because it is difficult to assess the risks,” Danilov clarifies.

RBC interviewed representatives of Russian banks with capital of 200 billion rubles. on their assessment of the prospects for the SME lending market. The leader in lending to the sector, Sberbank, is going to increase its portfolio of SME loans in 2018 from the current 1.3 trillion rubles. by 250 billion rubles. To do this, the bank plans to develop online lending and credit analysis technologies based on the use of big data. The bank's press service noted that Sberbank launched online lending to small businesses in March. Other banks that responded to RBC's request (Promsvyazbank, Uralsib, SMP Bank) predicted that the SME lending market will grow, and they do not intend to change their approaches to assessing the quality of the borrower. “We expect that by the end of 2018, rates on SME loans may fall. The reason for this will be a rate cut by the Central Bank. As a result, the growth of lending to the SME segment in 2018 will continue and reach a level of 9-10%,” predicts Kirill Tikhonov, vice president and managing director for small business development at Promsvyazbank. Lending to SMEs will grow due to “improving the situation in the Russian economy” and reducing loan rates, he believes.

Microfinance is one of the effective methods for developing small businesses. This is a financial industry aimed at providing various financial services to individuals who, for one reason or another, are unable to use conventional banking services, for example, start-up entrepreneurs who lack funds for current activities.

Those. it all comes down to money. The first problem for a novice entrepreneur is initial (start-up) capital. If this problem is solved, a second problem arises - further development of the business, which is difficult to solve without an accessible lending system, and the start-up capital will not be enough.

Therefore, in the activities of the Government Commission for the Development of Small and Medium Enterprises, the task of developing the microfinance institution appeared. In addition, the development of microfinance is included in the package of anti-crisis measures provided for by the Federal Program for Support of Small and Medium-Sized Enterprises.

Microfinance activity is the activity of organizations created for the purpose of providing access to small and medium-sized enterprises and infrastructure organizations for supporting small and medium-sized businesses to financial resources by providing loans (credits) to small and medium-sized businesses.

At its core, this activity is aimed at microcrediting entrepreneurs. A key feature of the activities of such organizations is the small amount of funds issued, covering small expenses for entrepreneurs. Thus, the main component of microfinance is microcredit, and in our country, where the microfinance market has just begun to develop, these concepts are almost identical.

The problem of microfinance in the Russian economy today has acquired a specific significance, and it should be considered not only as the most important tool for solving the problems of medium and small businesses and promoting entrepreneurship, but also as an instrument of anti-crisis policy.

Microfinance solves two important problems: firstly, it helps to develop small businesses, teaching entrepreneurs to work with borrowed funds and build a credit history; secondly, it helps to overcome poverty and unemployment.

According to the Ministry of Finance, there are currently about 450 organizations in Russia that, in their organizational and legal form and type of activity, may correspond to the characteristics of microfinance organizations.

Activities alternative to bank lending are regulated by the law “On microfinance activities and microfinance organizations.” The regulator in the microfinance lending market is the Ministry of Finance.

There are many different microfinance programs currently being implemented. They are developed and offered to clients not only by banks, but also by specialized credit organizations involved in financing small and medium-sized businesses. They provide microfinance to small businesses and entrepreneurship support funds. They can be both state and non-state. But their main service is providing microloans.

So, a microcredit is a kind of loan provided to small businesses under certain conditions.

According to the Russian Microfinance Center, the volume of loans on the Russian microfinance services market is estimated at 26-27 billion rubles, of which 54% are loans for business development, 35% for consumer needs. Average loan amounts are 100-150 thousand rubles. Maximum microloan – 1 million rubles. Moreover, 80% of loans are issued for a period of up to 1 year.

The economic situation in Adygea is noticeably different from what is happening in other subjects of the federation. The Republic at one time did not follow the path of some regions, including large cities, which, having taken out large loans for development, now found themselves hostage to the crisis.

In this regard, the leadership of Adygea managed to prevent a negative scenario for the development of the economic life of the republic. In the absence of external debts, she makes do with the resources she has. And the most effective anti-crisis measure turned out to be a focus on small businesses.

The package of anti-crisis measures at the federal level provides support for small and medium-sized businesses in three areas. It is they who have become a priority in the republic. First of all, this is an increase in the amount of microloans at a moderate interest rate, improving the work of the established guarantee fund, as well as subsidizing interest rates on loans.

In order to improve the mechanism for providing financial support to small and medium-sized businesses, the Microcredit Program for Small and Medium-sized Businesses of the Republic of Adygea was approved.

According to the RA Small Business Development Agency, funds in the amount of 45,000 thousand rubles were transferred for the implementation of the program in 2010. including:

9,000 thousand rubles. – subsidies from the republican budget of the Republic of Adygea;

36,000 thousand rubles. – subsidies from the federal budget of the Russian Federation.

In 2010, 68 meetings of the credit commission of the RA Small Business Development Agency were held, at which 256 loan applications from small businesses were reviewed, positive decisions were made on 228 applications, for a total amount of 54,630.0 thousand rubles. A positive decision on 28 applications was rejected or delayed. Main reasons for refusal:

Applications do not meet the selection criteria for potential borrowers;

Absence or insufficiency of collateral;

Inconsistency of lending goals with the objectives of priority areas of government support;

The presence of types of activities that do not comply with the conditions for the provision of state support, defined by Federal Law-209 “On the development of small and medium-sized businesses in the Russian Federation”;

Providing an incomplete package of documents;

Providing false information.

Having analyzed the approved loan applications in tables 1 - 3, we can conclude that a total of 80% of loans were issued in the city of Maikop, Maikop and Giaginsky districts in such areas as trade and agriculture (tables 1 - 2). Most of the enterprises in Adygea operating in the trade sector are enterprises with no more than 15 employees. More than 97% of loans were taken to replenish working capital (Table 3).

Table 1. – Distribution of borrowers by region and cityRepublic of Adygea

Place of business	number of approved applications	share, %	approved loans, thousand rubles
Giaginsky district	32	11,09	6 060,00
Shovgenovsky district	22	4,14	2 260,00
Koshekhablsky district	27	7,35	4 010,00
Krasnogvardeisky district	3	2,75	1 500,00
Takhtamukai district	3	0,92	500,00
Teuchezhsky district	3	1,37	750,00
Maykop district	22	13,12	7 170,00
Maykop	112	56,06	30 630,00
Adygeisk	4	3,20	1 750,00
TOTAL:	228	100,00	54 630,00

Table 2. – Distribution of borrowers by areaactivities

Branches of activity	number of loans	share, %	loan amount	share, %
Production of goods	28	12,28	13 960,00	25,55
Trade	90	39,49	15 320,00	28,05
Household services for the population	14	6,15	3 300,00	6,04
Construction	4	1,75	1 250,00	2,28
Agriculture	59	25,87		19,68
Transport services	10	4,38	1 250,00	2,28
Other	23	10,08	8 800,00	16,12
TOTAL:	228	100,00	54 630,00	100,00

Table 3. – Distribution of borrowers by lending purposes

Users of financial support within the framework of the “Microcredit Program for Small and Medium-Sized Enterprises of the Republic of Adygea” as of 01/01/2011 are 393 small and medium-sized businesses, of which 92 small and medium-sized businesses are engaged in the production of agricultural products. Among the borrowers are 53 peasant farms.

The anti-crisis program provides preferential short-term microcredit to businessmen starting out and developing their business. It is this category of entrepreneurs that is most vulnerable to the crisis, since they do not have a collateral base, credit history and a working current account. Under these conditions, banks stop lending to small businesses. In Adygea, the maximum amount of a microloan for working capital has been increased from 300 to 500 thousand rubles. The microloan amount for commodity production and development of tourism infrastructure has also been established - one million rubles at 16% per annum.

Small and medium-sized businesses are the basis for the stable development of the economy of any country: the development of SMEs makes it possible to increase the rate of economic growth, create stable internal effective demand, and also helps improve the quality of life of the population through the formation of a labor market in a competitive environment. However, the development of small and medium-sized businesses is associated with serious financial investments, which can only be made by attracting credit funds. Therefore, the development of the SME lending market is a priority task of any national economy. The editors of the portal site asked the leading expert of the banking services analysis department of the Banki.ru portal, Irina Safronova, about trends in the lending market for small and medium-sized businesses in Russia.

What were the main trends in SME lending noted at the end of last year?

Last year, banks slightly reduced the cost of their loan offers for small and medium-sized businesses. The average rate on business loans, calculated by Banki.ru experts for banks included in the TOP-100 in terms of the volume of the loan portfolio issued to enterprises and organizations, decreased by only 0.99 percentage points over the year, while in the first six months of 2017 this figure has already decreased by 1.35 percentage points. Such a low dynamics of the reduction in the cost of credit resources is explained by the slow reduction of the key rate by the Bank of Russia. At the same time, the state’s interest in supporting the SME sector stimulates the introduction to the market of more and more credit programs with state support, which somewhat improves the situation in the small business market.

What is the reason for the growth (reduction) of the SME loan portfolio last year?

Last year, the loan portfolio changed slightly and increased slightly, which is explained by several factors. Firstly, this is a high key rate and, as a result, expensive loans. And, secondly, due to the crisis situation in the market, banks, in their desire to reduce the risks of lending to such an unstable sector, tightened the requirements for borrowers as much as possible, which again did not contribute to an increase in demand for credit resources. Many banks have increased the requirements for the life of a business - up to two years; they began to require highly liquid property as collateral with mandatory insurance of it in an insurance company agreed upon by the bank, etc.

What obstacles exist in the Russian economy to significantly increasing the loan portfolios of banks in the small and medium-sized business segment?

A sharp increase in the loan portfolio is hampered by the high cost of credit resources, as well as the high riskiness of this sector of the economy. As a result, banks impose strict requirements on borrowers, and often limit their circle only to “their” verified clients, which makes it possible to study the borrower’s activities in more detail and control it during the validity of the loan agreement.

What are the key differences between lending to SMEs and large businesses?

Large business is much more stable. Often, large players attract financing by already having much larger amounts in deposit accounts, which is a certain guarantee for the bank of the repayment of the loan issued and allows them to offer special lending conditions. Enterprises in the SME sector often raise funds to cover current expenses or to purchase fixed assets, pledging property as collateral, which the bank cannot always quickly sell in the event of loan default.

Are there government programs to support business borrowers?

Currently, there is a state support program for small and medium-sized businesses, implemented by the SME Corporation. 51 banks are already accredited there. The first preferential loan was issued at the end of 2015, and already in 2017, the Central Bank of the Russian Federation increased the limit under this program to 175 billion (+ 50 billion rubles). A number of mandatory requirements are put forward for enterprises wishing to attract financing under state support. At the same time, financing is not provided to enterprises from the following industries: credit and insurance organizations, investment funds, non-state pension funds, pawnshops, professional participants in the securities market, participants in production sharing agreements, gambling enterprises, enterprises engaged in the production and/or sale of excisable goods, and also the extraction and/or sale of minerals (with the exception of common minerals).

What trends are observed in the SME lending segment this year?

Since the beginning of the year, many banks have been regularly lowering rates on their loan offers for small and medium-sized businesses. A new calculation of the average rate on business loans will appear on the Banki.ru website. There are several reasons for this. Of course, first of all, this is the Bank of Russia’s repeated reduction of the key rate. This is also a government program to support small and medium-sized businesses. It is hoped that the reduction in interest rates on SME lending programs will continue throughout the year.

What are the long-term prospects for lending to small and medium-sized businesses in Russia?

The SME lending market is more dependent on the economic situation and market fluctuations than the corporate or retail lending market. Therefore, in my opinion, we should not expect sharp growth in the coming years. To attract small businesses, banks need to simplify the conditions for obtaining financing and offer more favorable conditions. At the same time, it makes sense for credit institutions to develop financial literacy among small and individual businesses, because For a successful start, they sometimes need not only financial, but also informational support. For example, on the SME Bank website there is a project called SME Business Navigator, with which you can determine the saturation of the market with certain enterprises, as well as calculate a business plan based on your input.

Dmitry Nechetov

Many entrepreneurs, when developing a business plan for the new calendar year, are often interested in what small business lending will be like in 2017, whether they should count on government support or whether it is better to attract other sources of financing.

Given the difficult political situation, as well as the huge number of unresolved macroeconomic issues at the state level, pessimistic analysts argue that small businesses should not hope for serious government support or the loyal attitude of representatives of banking capital in the near future. But with such an attitude towards the prospects for the development of your business, you don’t need to register an individual entrepreneur or LLC at all, but simply get a job in your specialty and give your strength, intelligence, knowledge and talent for pennies to more enterprising citizens.

The presented article will be of interest, first of all, to those readers who are already running their own business or planning to create their own company in the near future. In addition, this information will be useful for students and teachers of economic educational institutions, as well as analysts working in this direction.

Lending to small businesses in 2017 - government support

Despite the difficult economic situation, the government and the Central Bank plan to work this year, focusing on supporting and developing small and medium-sized businesses. Through joint efforts, government officials and the main financial regulator of the Russian Federation promise to organize the provision of credit funds for business entities with minimum annual rates from 6.5 to 11 percent. Time will tell to what extent economic promises will correspond to reality.

In addition, a geomarketing navigator mechanism is planned to be launched this year. The main purpose of this system is to provide entrepreneurs with information about the current situation in the market segment they are interested in, in any region of the country. If this idea works fully, beginning commercial entities will be able to significantly reduce the costs of organizing their own business.

If you conduct a thorough study of all existing options for supporting small businesses that the state provides, you can highlight the following important areas:

Federal programs for aspiring entrepreneurs, as well as business representatives engaged in production, eco-tourism or the development of folk art.

Providing assistance to small businesses by providing land plots (especially for growing agricultural crops without the use of chemicals and GMOs), training, consultations on legal, financial and tax issues.

Business support, which is expressed in the provision of property necessary for the operation of the company (real estate, equipment, machinery, warehouses).

Providing a government grant.

If the successful implementation of your commercial project does not require millions, you can receive legal assistance from the state through the Employment Center. To do this, you need to quit your job (everything must be done legally), register with the Employment Center, come up with a promising commercial idea, develop a detailed business plan and submit an application for participation in a competition from the Employment Center. If everything is fine, you will be given the necessary amount of money, but they will require reports on the areas of use of these funds.

If none of the listed options is suitable for your business, try to get a preferential loan from the government or find alternative sources of financing for your commercial projects.

Please note the fact that a loan for small businesses in 2017 from the state has very attractive interest rates (up to 6%), but only certain categories of entrepreneurs can receive this money:

manufacturers of oil and gas equipment;

those who produce products that were previously imported from the states, Europe and other countries;

exporters who indirectly influence the size of the country's foreign exchange reserves;

business entities involved in the development of innovative production methods.

If your activity falls into the category of priority sectors of the economy, you have a real chance of getting a loan on preferential terms. To do this, you need to contact a financial institution that is a partner of the state fund (it is this body that makes the decision to issue a preferential loan) with a corresponding application. The next stage is associated with checking the borrower’s activities in order to objectively assess his financial situation. If the fund's representatives are satisfied with everything, you will receive that long-awaited loan.

There is an alternative opportunity to receive financial assistance from the state. To do this, you need to contact a municipal or regional fund with a request for a loan on preferential terms. Typically, these government agencies issue small, short-term loans.

It is better to use this money to implement commercial projects that allow you to make a profit within a short period of time. For example, you are engaged in the production of paving slabs, and you have a large order coming from a company that is creating a huge chain of supermarkets. A potential customer plans to pave the area near his stores with paving slabs so that all supermarkets look exactly the same.

Representatives of this company are ready to buy a large quantity of these products every two months (after purchasing a trial batch), but you do not have enough working capital to fully satisfy the customer’s requests. In such situations, a short-term loan on preferential terms is an ideal option to solve this problem. You are provided with a loan, you launch additional production capacity, and two months later you receive money from the customer. The gross income from this operation will allow you to pay off the municipal/regional fund, as well as earn money for the enterprise. If the customer asks to make another batch of paving slabs, you can fulfill his order according to a similar scenario.

In addition to the listed types of preferential lending, business entities can receive a compensatory loan. The main purpose of this state assistance is full or partial repayment of loans and interest on them that were previously received. This allows entrepreneurs to work calmly, without being distracted by resolving credit issues.

Experienced businessmen recommend creating a promising innovative project that is directly or indirectly aimed at supporting domestic science. Such ideas are funded by the state quickly and without unnecessary paperwork.

Many readers are interested in which categories of entrepreneurs are not eligible to receive government preferential loans. First of all, this applies to bankrupt businessmen or those who will soon be forced to declare bankruptcy. You can forget about government assistance if you already have experience of non-repayment of preferential loans. Before providing financial assistance to a business entity, government officials check whether it has any debts to the budget, funds, etc. Unpaid debts and unfulfilled obligations to the state often become the reason for refusal to issue financial resources on preferential terms.

Bank loans

In a normally functioning national economy, most entrepreneurs do not even consider options for obtaining money for business development from government funds. If there is a lack of working capital or free capital to implement a promising business idea, business entities go to the bank, where they will be provided with the required amount, on acceptable (for both parties) terms. But our country’s economy is going through hard times, and this has a negative impact on the work of the banking sector.

For the third year in a row, there has been a steady decline in lending to small firms, enterprises, etc. If we believe analysts’ forecasts, then lending to small and medium-sized businesses in 2017, at best, will remain at the level of 2016, and according to pessimistic expectations, negative dynamics in issuing loans for the needs of small businesses will continue in this sector.

Your attention should be drawn to the fact that the described situation has developed not only due to general economic problems. The structure of banks’ loan portfolios, as well as the unstable political situation, played an important role in the unsatisfactory lending to small businesses.

Despite the lack of prerequisites for improving the situation in lending to small firms/enterprises, some economists claim that if in the first quarter of this year the main indicators of the state budget correspond to the planned ones, then in 2017 a positive trend can be observed in terms of changes in lending to small businesses.

The structure of loans issued to small and medium-sized businesses does not give reasons for optimism. Last year, financial and credit institutions, when issuing loans to small firms, focused primarily on business entities engaged in wholesale and retail trade. And the heads of large banks are not going to change priorities in the near future. In general, for any national economy, lending to firms engaged in trade is a negative factor. In order to move from the “dead point,” it is necessary to actively support manufacturing enterprises, which are not accidentally called the “locomotive of the economy.”

They provide new jobs, stimulate the development of related industries, increase the revenue side of the state budget, from which medicine, education, the army, etc. are financed. At the same time, the owner of a trading company, having received a loan, will simply increase the volume of sales of goods and put more money in his pocket. Most likely, he will not even raise the wages of his employees.

The good news is the statement of the chairman of one of the large banks that in 2017 the scheme of cooperation with representatives of small businesses will be radically changed. The banker understands the problems of this sector of the economy and sees great prospects in the development of lending to this category of business entities.

The priority tasks for the banking sector in 2017 are:

Changing the structure of loan portfolios, focusing on providing loans to small enterprises.

Significantly increase the issuance of loans to firms engaged in production or working in the field of creating innovative technologies. As a last resort, use financial resources intended for trading companies for these purposes.

Gradually increase the amount of long-term targeted loans.

Review existing options for securing loans issued. Where possible, use equipment, real estate or patented technologies as collateral.

Establish closer cooperation with government agencies that deal with small business lending.

Only through the joint efforts of the government, financial institutions, the Central Bank and business representatives can it be possible to create an effective lending system that, with the right approach, will stimulate the development of the entire country’s economy.

If you are registered with the Employment Center and decide to use your right to a loan to create and develop your own business, before receiving this loan, think carefully: you will be able to account for every penny spent. All expenses must be solely for their intended purpose, which is confirmed by a business plan (it will indicate the direction of activity) and documents from the seller of the product you need. If you do not have all the checks, invoices and other papers confirming the intended purpose of the money spent, expect serious trouble.

In order to increase your chances of receiving a preferential loan from the state, pay attention to the following important points: liquid loan collateral, a real business plan, relevant experience, clear advantages of your business idea over other similar projects. The presented list will help you get the necessary amount of money on preferential terms.

Keep in mind that small business support programs may vary in each region of the country. Sometimes, to get a loan with low interest, you need to invite another representative who must vouch for you. In other regions, there are situations when an entrepreneur is deducted from the issued loan, which he must pay for the entire period of using the money.

Despite the difficult state of the country’s economy, which is aggravated by political problems and the unfavorable situation in the international arena, lending and support for small businesses should improve significantly in 2017, as evidenced by the government’s plans in this industry, statements by bankers, as well as the position of entrepreneurs themselves.

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