Small and Medium Enterprises (SMEs), including those in Tourism & Related Support Services, Horticulture and Agro-Export, and Export Processing sectors, are an important driver of economic growth. SMEs often require external finance to sustain and grow and this can be difficult to access sufficiently.
MDF conducted a study to determine whether SMEs could potentially better access finance from formal financial institutions, if SMEs had access to affordable business advisory services, specifically tailored to improve the relationship and information flow between the SME and the bank. The MDF study showed that banks, SMEs and business advisory organisations all agreed that good business advisory services could potentially improve access to finance for SMEs. MDF is implementing the concept through a pilot project involving several financial institutions in Fiji, including ANZ Bank.
The proposed concept is designed to link business advisory services to SME loans applications. SME bank loan applications that look promising, but do not fully meet a bank’s serviceability criteria, would normally be rejected by the bank. With the assistance of a business advisor, the SME could review the business plan, cash flows and loan application and re-submit the loan application on the basis that the SME is now better able to provide evidence to support cash flow forecasts and serviceability. The business advisory services will be offered by established business advisory firms, accounting firms, SME tax agents and other suitable business advisers. MDF will work with this pool of business advisers to develop the tools and services and link the business advisers with the banks and the SMEs.