Barclays Bank has announced a Sh30 billion war chest to lend to Small and Medium Enterprises (SMEs). The bank, which has in the past only focused on retail and corporate banking, yesterday said it had dropped some of the stringent requirements that lenders demand from the SME market.
For example, borrowers will no longer need to have audited financial statements to access the loans. Borrowers will get up to Sh6 million in unsecured loans. Borrowers will also not need to be account holders in the bank to get the loans but they will be required to open an account with the bank after the loan is approved.
Applicants will also get results of their application within 48 hours as the bank moves to cut turnaround times. “Most of these SMEs don’t have audited accounts. We didn’t have a product before and that is why some walked into our bank but walked away without one but now we are open for business,” Barclays Bank Managing Director Jeremy Awori said at a media briefing.
The money will be available to SMEs with a turnover of up to Sh300 million. The bank, however, did not give a specific rate it will be charging on these loans on grounds that different customers have different credit worthiness. “We are using advanced analytics to determine who is a better customer. The better risk will get better rates,” Mr Awori said.
The entry of Barclays into the SME sector is set to raise competition with its rivals like Equity Bank and Kenya Commercial Bank (KCB), which have in recent months unveiled products targeting the sector. KCB last month said it had set aside Sh40 billion ($400 million) in additional funds dedicated to investors in the sector. The bank’s Chief Executive Joshua Oigara said negotiations were also ongoing with the IFC and European Investment Bank for additional Sh25 billion with the cash expected before end of the year.
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On its part, Equity Bank signed loan deals amounting to Sh53.49 billion ($525 million) for onward lending to entrepreneurs and innovators in the sector following the two-day Global Entrepreneurship (GES) summit.
Guaranty Trust Bank Kenya (GT Bank) is looking to borrow Sh3.2 billion from the International Finance Corporation (IFC), the World Bank Group’s private lending arm, for onward loans to its small and large corporate customers.
In a move that will raise competition in the segment, Barclays has also introduced a single point of contact for SME customers in all its 121 branches countywide. SME customers will be served by an enterprise manager, relationship manager or branch manager as the case may be, thus offering them personalised service.
“We are not just throwing money at these ventures. Our resolve is to walk with our partners through the journey. Through this offering, we will offer expert business training sessions for the SMEs as well as expose them to international business opportunities through the Barclays Business Club,” Mr Awori said.