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SME's - a link between funding and a compliance model
Written by: Dr. Rob SmorfittArticle Overview: Exploring the link between a compliance model and funding for SME's
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Free Download - SMEs – SMEs struggling in South Africa. Why? By Dr. Rob Smorfitt |
SME's - a link between funding and a compliance model
SME's need cash, of that there is no doubt. Similarly, SME's are extremely high risk clients for banks, and it is unlikely that this will ever change.
So what is the solution, if one exists at all? The solution lies in providing a compliance model that mitigates the banks' risk. Until such time as we mitigate bank risk, it is unlikely that banks will free up finance to SME's on a significant level.
The existing compliance models within the market are working well and banks readily fund SME's that are part of compliance models. However, they need to be done on a larger scale in order to create more SME's. Similarly governments must perhaps fund the development of these compliance models by entrepreneurs, and avoid attempting to do so themselves, as this will surely lead to failure. The beauty of compliance models is that they reduce the need for entrepreneurs to drive these new SME's, and allows SME managers to be able to successfuly manage these businesses.
So let us make it easy for banks to fund African SME's, let us reduce the need for aid funding and charity, let us create SME's through compliance models.
Rob Smorfitt
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Article Tags: bank, compliance, finance, SME, Smorfitt
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About the Author: Dr. Rob Smorfitt RSS for Dr. Rob's articles - Visit Dr. Rob's website  Have an MBA and a PhD in entrepreneurship. Three key areas of ongoing research are entrepreneurship and innovation in large business strategy, the impact of legislation on SME development and SME finance. Run my own SME blog at http://sme-smb-smme.blogspot.com as well as an entrepreneurship and innovation for large businesses blog at http://innoveur.blogspot.com I have been self-employed since 1982. I have started or purchased in excess of 50 businesses since then. Most were sold again and a few were shut down because of a lack of profitability. Many were run by staff or family while I worked full time in my bigger businesses. Author of 6 books. Written articles for various magazines, newspapers and websites. Experienced in research within developing countries.
Click here to visit Dr. Rob's website  
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