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Monday, October 24, 2016

Loans for small businesses remained inaccessible

While the bankers cheerfully warn about the interest in lending to small and medium enterprises (SMEs), lending rates decline and loan funds not become available.

photo: Alexander Astafyev

Free fall

According to NAFI, the aggregate portfolio of loans to SMEs in the Russian banking system decreased by 6%, net loans — by 28%. SMEs seem to have become a kind of indispensable element of the grocery Bank lines, without which to trade financial products is not comme Il faut, but contact is more expensive.

By estimations of Chairman of Board of “National consumer community” Ilya Pronova, the annual volume of lending to SMEs are reduced by 30-50%. That is even more dramatic than shown in official statistics. Nothing heralds global recovery in the market in 2016. Member of General Council of “Business Russia” Anna Nesterova notes that, according to statistics of the Central Bank, at the end of the first quarter of the current year the debt of SMEs decreased by 2.2% compared to the data of January 1, and lists new negative factors affecting the development of small business. So, from April 2016, increased the excise tax on gasoline and diesel, the rates for small and medium entrepreneurs in the housing sector increased by more than 8%, were introduced tolls of vehicles on the “Plato”, and part of the money of the companies hung on settlement accounts of banks with revoked licenses from the beginning of such month had already accumulated more than 30 pieces.

High stakes

The President of the Club of young entrepreneurs Dmitry Porochkin believes that today loans for small companies unavailable, as a few years ago: “In recent years, new financial forms of support to SMEs — the interest rate subsidy, loan guarantee, but these mechanisms are not always transparent and not always well suited to SMEs.” In his opinion, the main criterion the availability of loans, rate and issue price of 20% eats up all the profits.

However, small companies applying for Bank money because of the lack of alternatives, although the current level of interest rates does not allow companies to maintain margins — not to be ruined, businesses have to raise the price of the final product.

This trend is confirmed by senior Vice-President of Bank “Opening” Larissa Shvetsova. According to her, the cost of credit borrowers include in operating expenses that affect the final cost of the product. And then the company raises the question of how to keep demand for their product in times of crisis for the business. Some companies are going the way of reducing other costs, others increase the final price of the product and monitor the market reaction. “Someone else reduces its profitability to the possible minimum, but keeping it a positive value,” — emphasizes the expert.

The struggle for survival

Today, interest rates on SME loans start from 16.5–17% per annum. “Of course, the current level of interest rates is quite high. Business margins in the last two years has decreased significantly. And this happens not only in the SME segment. At the same time, in the market there are opportunities for business development, as in some sectors competition has improved significantly, in particular due to the departure of some foreign players”, — noted the Deputy Chairman of the management Board of SMP Bank Timur Kastrov.

However, even those businessmen who scraped together funds for a loan can just not pass the “casting” of the creditor: receives approval to market average not more than 25-30% of applicants for the loan. “Now is the time hard risk evaluation by all banks”, — said the Deputy Director of corporate business Department of Rosgosstrakh Bank Natalia Kozlova, emphasizing that ideal client demonstrates clear economic operation, good financial condition as attested to by statements, ready to provide liquid collateral covering the loan amount with the discount rate, and the ultimate beneficiaries of the business are willing to provide personal guarantees. “Such “chocolate” companies today are not so much in all sectors, but they are there,” says Kozlov.

But the crisis dictates its own rules, and reappeared informal “black lists” of sectors that banks are afraid to lend. Absolutely all respondents “EV” bankers to such branches considered the construction. “In the past few years was rapidly developing residential construction, and therefore, many developers were akreditavimo. Now, many projects have been frozen. Car dealers are also experiencing great difficulties. The demand for passenger and commercial vehicles by the end of 2015 dropped more than 20%. Still there is a crisis on the tourist market since 2014, ceased operations more than 10 tourism companies, among which are quite large, with well-known names. It is not surprising that banks with great care to consider such customers”, — says Director of product development for small and medium business of the Bank Anna Salmanov.

Is it really all bad? Market participants say that the beam of light in the darkness still evident. Even few. This tax holiday for SMEs in the application of the simplified tax system, a three-year moratorium on testing, the creation of state corporations, SMEs and the activities of other relevant institutions like the industrial development Fund, Agency of credit guarantees and SME Bank.

In NAFI at the same time hope that preferential interest rates (10-11%) in the priority sectors of the economy, the reduction of reserve requirements and the easing of capital requirements for banks working with SMEs, will stimulate the interest of market players on both sides. But staging the diagnosis is disappointing: “we Need to recognize that businesses were less likely to use credit funds, almost do not implement investment projects. This is due, in particular, as high cost of credit, and maintaining the risk in the economy and uncertainty entrepreneurs in the future” — sums up Castrov.

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