Building, maintaining credit a major challenge for SMEs: seminar
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The three main challenges for small and medium-sized enterprises in the globalisation era are how to build and maintain credit, how to access funding sources and how to manage operations, a seminar heard yesterday.
Speaking at KTB’s “Global Business Challenge: The Next Generation Business Leader” seminar, president Vorapak Tanyawong said SMEs should know what they want to achieve in doing business – and the finance required to support their objectives.
Credit-building is, therefore, the priority for this size of business.
When building up their credit position, business operators must secure their credit as it is important to show banks that they have ability to repay debt when it comes to borrowing more.
SMEs are a major focus for commercial banks, including KTB, as they are key drivers of both the corporate sector and the domestic economy, he added.
Weidt Nuchjalearn, first senior executive vice president at KTB, said on the sidelines of the seminar that the bank would focus more on small enterprises and supply chains with credit lines of up to Bt20 million, as these customers provide high yields and enable the bank to offer cross-selling products.
Suppliers
Most small-business customers are suppliers to corporates that are also clients of the bank, which makes small business a low-risk segment for KTB, he said.
Vorapak told the seminar that as banks considered giving loans to SMEs based on their management and debt-repayment ability, enterprises wanting to expand their business and eventually upgrade to corporate size should focus on building their credit and reliability.
For SMEs, bank loans are the first source of funds to help expand their business, he said, adding that companies should however know their cash flow before considering what kind of loan best supported their operations.
The bank president said SME businesses generally had a high annual growth rate of 20-30 per cent, compared with 10 -20 per cent for corporates, while banks in general target expansion at 1.5 times the growth of gross domestic product.
KTB has been able to achieve overall lending growth of 10 per cent this year, higher than the average for the banking sector, but lower than the growth rate of SMEs.
