Stanbic bank introduces collateral-free lending service to SMEs

Stanbic bank introduces collateral-free lending service to SMEs
Source: Ghana | Bismark Awusah | JoyBusiness
Date: 04-04-2019 Time: 08:04:52:pm

Stanbic Bank Ghana has introduced a banking product which will allow for Small and Medium-scale Enterprises (SMEs) to access loans from the bank without providing any form of collateral. 

According to the bank, this is in line with the recognition of SMEs as better placed in gratifying various socio-economic objectives of the country.
Known as Stanbic Enterprise Banking, the bank says the product is an enhanced form of service and dedication to its clients in the SME’s sector.

Speaking to JoyBusiness at a media engagement on the product, Head of Personal and Business Banking at Stanbic Bank Ghana Ltd., Nana Dwemoh Benneh said, “We have identified presenting collateral by way of access to loans from a bank as one of the challenges deterring businesses from borrowing from banks to finance their operations; it is in this regard that we have launched the Stanbic Smart loan as one of the services under our Enterprise banking proposition.”

He added, “Under this scheme, we provide ‘unsecured’ lending to SMEs ranging from as low as GH¢40,000 to as high as GH¢160,000 and by so doing, we only monitor the cash flow of the SME business and that would determine the eligibility of your application for support.”

The bank says it hopes to increase its over 20,000 SME database before the end of the year through the initiative.

Stanbic Bank has expressed its continued support to the SME sector. Under its Enterprise Banking are some services like the Enterprise Direct Proposition which allows for clients to receive services via the telephone; the Enterprise Online which allows SMEs access to their accounts and the Enterprise Smart Loan which provides businesses with funding.

Ghana’s SME sector

The importance of the SME sector is well recognized worldwide due to its significant contribution to the economy in terms of higher growth of employment, output, promotion of exports and fostering entrepreneurship.

Recent empirical studies show that SMEs contribute to over 55% of GDP and over 65% of total employment in high-income countries. 

SMEs and informal enterprises account for over 60% of GDP and over 70% of total employment in low-income countries, while they contribute over 95% of total employment and about 70% of GDP in middle-income countries (OECD, 2016).

Despite these statistics, SMEs in Ghana have over the period been given little attention in terms of financial support within the banking industry as banks usually target high net-worth customers with a chunk of dedicated resources, hence, the Stanbic Enterprise proposition.