and leasing transactions, which partially or completely can’t be ensured or guaranteed by the third parties. Due to the fact that many small and medium-sized businesses are experiencing problems in providing collateral for loans for a period longer than one year, the creation of such an agency was a major step in support of SMEs particularly in the Leningrad region.
The agency operates on the principle of payment for their services. In this case, the borrower must cover at least 30% of its liabilities to the bank for a period of up to five years, and the maximum amount of guarantee is 3 mln rubles. The agency and the borrower shall be jointly liable for repayment of the loan to the bank. When applying for a guarantee the borrower must meet the following requirements:
- must comply with the criteria for SMEs
- must be registered on the territory of Leningradskaya region and to run business for at least one year
- financial and economic activity of the borrower mustn’t meet breakeven at least 3 months that precedes the date of the loan application
- the purposes of the loan must be either industrial projects, or projects to provide services.
Another mechanism to simplify the system of lending for SMEs is the introduction of so-called "credit factories". This mechanism helps to reduce operational costs for consideration of applications, but at the same time it increases the risk of these loans, which, in turn, leads to an increase in interest rates on such loans. If such a mechanism is effective with respect to our country will be clear in a few years, when there will be more or less stable circuit of such lending that will minimize the negative consequences of the introduction of this mechanism.
Another successful form of interaction between banks and small and medium-sized businesses is a mechanism when the bank provides the borrower with additional services such as consulting services, services for accounting and reporting, personnel management and production, and others. This is necessary because many persons, who run their small business, often do not have adequate financial education, and for this reason cannot properly keep track of all processes in the organization.
For people who just want to start their own business, today there are two new forms of cooperation with banks:
- The first type is franchise lending. The borrower is actually provided with ready-made business and it operates under a certain brand and the terms of the franchise. In this case, the borrower would have to pay part of the initial capital. The loan amount