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Standard Bank launches new lending facility for SMEs

Standard Bank
Lending to smesSmall and Medium Enterprises (SMEs) in Africa received a major boost with the launch of a new lending facility that uses psychometric assessment to provide loans to small businesses by Standard Bank Group.

Through the system, over 40 million SMEs in the 17 countries the bank operates in are expected to access $125 million in loans by the end of next year to facilitate the growth of their businesses. This is more than four times what the bank is extending currently.

Psychometric Test for Quick Loan

A psychometric test will be used to judge a person’s suitability for obtaining a loan. The SME will be expected to answer a number of questions to obtain the psychometric profile of a client, which is then used to assess his or her willingness to repay the loan.

The test judges a number of factors that are critical the psychometric assessment of whether a client can be trusted with a loan, such as risk aversion, attitude, character, ethics, intelligence and business skills.

Speaking at the facility’s launch, Head of SME banking for Standard Bank, Amrei Botha said that the financing product , called Quick Loan , lends between $300 and $30,000 to be repaid within three , six and 12 months.

[sws_blockquote_endquote align=”left” quotestyle=”style02″]Standard Bank has made a strategic decision to use the psychometric basis for advancing SME Quick loans to previously unbanked and undeserved wholesalers and retailers[/sws_blockquote_endquote]

– Amrei Botha

She said that access to finance constrained the growth for many small businesses hence the need to come up with a simple, convenient and affordable way of approving and giving loans.

[sws_blockquote_endquote align=”left” quotestyle=”style02″]The bank has reduced its loan disbursement process from weeks to less than three days and reduced application forms from 19 pages to two,[/sws_blockquote_endquote]

– Shiro Mwendwa

Amrei Botha said that $30 million in loans have already been expended to more than 4880 businesses with an average interest rate of between 1.2 to 6 percent per month. The SME Quick Loan has been launched in Kenya, Tanzania, Ghana and Nigeria.

Data from Central Bank of Kenya (CBK) shows that the stock of gross non-performing loans in the banking industry was $637 million in July 2011, which is 5.2 percent of total loans. CFC Stanbic’s annual financial report in 2010 showed that the gross non performing loans amounted to 1.7 billion , or 2.9 per cent of total loans, which is lower than the industry average a, and lower that the bank’s 2009 level of 3.9 percent.

CFC Stanbic Bank which is operated by Standard Bank Group is ranked the sixth largest bank in the country with over 65,000 deposit accounts and over 30, 000 loan accounts, according to the latest CBK statistics.

Image courtesy: FreeDigitalPhotos.net

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