Speaking on an X-Spaces discussion on the topic ‘Access to Finance: Bridging the Gap for SMEs’, he said contrary to the common misconception that banks were reluctant to finance SMEs, Stanbic Bank was rather eager to provide financial support to businesses.

Sharing some challenges in providing solutions for SMEs in Ghana, he said the opaqueness in business operations was one of the main challenges SMEs have. 

“A significant number of SMEs operate with a lack of transparency, making it difficult for banks to understand their business models fully. 

“This opaqueness complicates the process of assessing the viability of the business for financial support,” he stated.

He said there was also the issue of the character and credibility of business owners which are critical in banking. 

“If a business owner does not exhibit trustworthiness, banks are hesitant to provide financial assistance,” he said.

Accurate financial records 

Mr Tsiri said a lot of SMEs struggle with maintaining accurate financial records, adding that inadequate record-keeping makes it difficult for banks to assess the business’s financial health, further complicating the lending process. 

Also, he said the habit of issuing dishonoured cheques was a red flag for banks.

“When SMEs regularly issue dud cheques, it raises concerns about their financial stability and reliability.” 

“Furthermore, access to finance is often contingent on the availability of collateral. Many SMEs, however, lack sufficient collateral to secure loans, limiting their ability to access necessary financing,” he added.

Approach to SME lending 

On the bank’s approach to SMEs financing, the Stanbic executive said the bank treated every case as a unique one in fashioning solutions. 

He said the bank offered a range of financing options tailored to the specific needs of SMEs.

“The bank does not adopt a one-size-fits-all approach; instead, we thoroughly assess each client’s business needs, cash flow, inventory, receivables and payment terms before proposing a financing solution. 

“Even in some cases, we may advise a client against taking a loan if it is not in their best interest,” he said.

Mr Tsiri also outlined some financing options the bank has available to SMEs.

He mentioned working capital support that is provided to bridge gaps in cash flow, such as when suppliers demand payment before the SME’s customers have settled their invoices and bridge financing, a short-term financing that helps businesses manage cash flow between transactions, particularly when waiting for payments on credit 
sales. 

Others are contract financing, which is offered to businesses that need funds to execute contracts, asset financing, a long-term financing that supports businesses in acquiring assets such as vehicles or setting up infrastructure, with repayment structured over the useful life of the asset, and guarantees and letters of credit for international transactions.

Eric Tsiri also highlighted Stanbic Bank’s business incubator, which supports SMEs beyond just credit. 

The incubator, he said, provides access to information, markets and networking opportunities. Additionally, the bank is exploring innovative ways to de-risk the SME sector through partnerships with fintech companies and the use of artificial intelligence.