Current Challenges and Opportunities for SMEs Accessing Credit
According to the National Business Financing Survey (ENAFIN) 2024, only 50% of SMEs have applied for business loans, and only half of those have successfully obtained bank credit. René Saúl, CEO of Kapital Bank, states in an interview that while there are structural challenges to SMEs accessing credit, new opportunities also exist.
The Plan Mexico aims to ensure that by 2030, 30% of SMEs will have access to formal credit. Currently, their primary source of financing is family and friends.
“Banks and the government must collaborate to simplify credit access processes, encouraging informal businesses to formalize so that we can better serve them,” Saúl explains.
Liquidity Issues Driving SMEs to Seek Credit
Saúl emphasizes that SMEs face liquidity issues, as payment terms from their clients can stretch to 60, 90, or even 120 days. This situation compels them to seek credit.
“The main problems for SMEs are that their money isn’t with them; it’s either with suppliers or clients. The second issue is that they don’t understand their financial numbers,” Saúl says.
Moreover, SMEs often lack awareness of their financial situation, which prevents them from approaching banks due to a lack of genuine understanding of their business’s financial health.
“Typically, all numbers are run in Excel, and business owners are out selling, worried about sales or timely payments to suppliers,” Saúl adds.
Here, technology can be a valuable ally, enabling real-time tracking of sales, expenses, and income. This data empowers SMEs to make informed decisions and combat liquidity issues.
How to Boost Bank Credit for SMEs
Although in May, banks and the federal government signed an agreement to increase SMEs’ access to formal credit, specific measures have yet to be detailed.
Saúl suggests that the first step is understanding SMEs, as banks often fail to recognize their needs. Cash flow analysis is crucial in this process.
Secondly, financial education must be provided. Additionally, improving conditions and digitizing processes are essential.
“Collaborating with the government to facilitate credit access and digitize processes, as regulatory support is needed for us to implement digital tools effectively. Currently, regulations hinder certain actions,” Saúl explains.
Saúl points out that manual processes, such as physical signature requirements for account opening and in-person verification of SMEs and constitutional registration, can be streamlined through digitization. This reduction in processing time could even lead to better credit opportunities.
“The challenge lies in manual, regulation-dependent processes that need to be digitized and improved with government support,” Saúl concludes.
Key Questions and Answers
- What are the main challenges SMEs face when accessing bank credit? Structural challenges include a lack of understanding of SME needs by banks and the importance of cash flow analysis. Additionally, manual processes in banking and account opening create obstacles.
- Why do SMEs struggle with liquidity issues? Long payment terms from clients (60-120 days) and a lack of financial awareness contribute to SMEs seeking credit.
- What role does technology play in improving SMEs’ credit access? Technology enables real-time tracking of financial data, empowering SMEs to make informed decisions and address liquidity issues.
- What steps are being taken to boost SMEs’ access to bank credit? Collaboration between banks and the government aims to simplify credit access processes, promote formalization of informal businesses, and provide financial education.
- How can manual processes in banking be improved for SMEs? Digitizing account opening processes, such as signatures and verifications, can streamline operations and potentially lead to better credit opportunities.
