South Africa : SME lending returning to pre-Covid levels
- 29 March 2022 / News / 56 / Fares RAHAHLIA
FNB continues to contribute towards economic development and employment by providing innovative funding solutions to SMEs.
For the Year Ended 30 June 2021, FNB Commercial extended lending to SMEs in excess of R41bn on the back of simplified, scored, digital lending processes. 44% of this amount was extended through unsecured funding.
Between July and December 2021, FNB commercial advances grew 9%, reflecting the improvement in economic activity and appropriate risk appetite changes.
Commercial property finance increased by 4%, asset-backed finance 11%, specialised finance 24% and the agricultural portfolio grew 13%.
Daniel Kaan, Transact Pillar CEO at FNB says, “it’s encouraging to see our SME lending activities returning to pre-pandemic levels with more businesses requesting loans for working capital financing and growing their businesses,”.
“The significant growth in SME lending activities is indicative of our commitment to lend to a wider range of small businesses at a time when credit is needed the most.”
“Not only are we open to lending more to SMEs responsibly, our loan review and approval processes have also been simplified making it easier to evaluate our customers’ risk profile, financial, sector and business information, as well how much they can qualify for,” says Kaan.
“Furthermore, our ongoing efforts to provide SMEs with simplified and innovative lending solutions continue to pay off as more businesses increasingly apply for credit via our digital channels.”
“A significant portion of our SME base are using the FNB App and Online Banking to take up unsecured lending products such as terms loans, revolving loan and overdraft facilities.”
“The entire process is digitised allowing SMEs to conveniently access loans within a few minutes, without speaking to a bank representative,” he adds.
Kaan says “unsecured funding creates greater momentum for inclusive growth because there is no requirement for collateral, which can be a major constraint to financing SMEs that do not have capital to fund their early-stage growth.”
“To facilitate this, within appropriate risk frameworks, we utilise an alternative credit scoring model”.
“Our model analyses behaviour instead of audited financial statements to understand financial and trading history, and applies automated processes that significantly simplify loan application and approval.”
“The financing primarily facilitates working capital financing, which assists businesses to maintain healthy cash flow positions,” he concludes.