For SMEs Accessing Finance Is A Key Challenge: Study | SupportBiz


For SMEs Accessing Finance Is A Key Challenge: Study

Tags: finances
For SMEs Accessing Finance Is A Key Challenge
Over three-fourth of Indian SMEs said there are more business opportunities providing ethical, transparent and locally sourced products.

For small and medium enterprises (SMEs), accessing finance is the most difficult part and most of them rely on traditional bank loans to run their businesses. A global survey by American Express underlines that 42% of Indian respondents find access to finance to grow business difficult, as compared to a third of their global peers. The survey says that 82% of all SMEs plan to use bank loans. However, with rising borrowing costs, Indian SMEs are taking a hard look at their finance options. In fact, 69% of the fast growing ones say they will tap other sources of funding such as public equity. Managing expenses effectively is a key focus area for Indian SMEs who are now placing equal priority on expense management as much as on increasing revenue.

The study revealed that SMEs in India are using their advantages - such as size, agility, and innovation - as one of their top three strategies for fueling revenue growth in 2018 even as they look at embracing responsible business practices as a way to attract more customers, the second edition of the American Express Global SME Pulse 2018 revealed."

The survey further revealed that Indian SMEs, like their global counterparts are going 'back to basics' with a focus on growing current market share, increasing operational efficiency and maintaining current company strengths to unlock growth in 2018.

American Express has partnered with <a href="/search?query=Oxford Economics">Oxford Economics</a> to survey SMEs from around the globe, to understand the threats they face and the business opportunities and strategies they will take advantage of in the year ahead. The research makes for positive reading, showing that Indian SMEs - the backbone of the economy - will focus on core strengths to support confident growth plans in the coming year.

Saru Kaushal, Vice President and General Manager, Global Commercial Services, American Express Banking Corp., India said, "Our research shows that India's smaller enterprises are primed for success in 2018 by balancing revenue growth with efficiency improvements and leveraging unique attributes of agility, innovation and strong customer relationships. Indian SMEs are now placing equal priority embracing responsible business practices to attract more customers."

"Small enterprises are balancing revenue growth with efficiency improvements and leveraging innovation and strong customer relationships. The American Express Global SME Pulse 2018 survey highlights that time-consuming application process, high interest rates and hidden fees are the top pain points for SME entrepreneurs," he added.

“At present it takes around 30-40 days for small entrepreneurs to get loan from banks because of documentation process and credit evaluation. But with new technology solutions, the process can be done faster and entrepreneurs can get quick access to funds,” Kaushal said. Over three quarters of Indian SMEs say that customers are demanding more new or tailored products and services, and some 44% plan to apply new technology to help them redesign products or services.

On the positive note, when compared to others in their industry, 80 per cent of Indian SMEs as compared to the global average of 74 per cent said they are effective and efficient in managing day-to-day operations and 63 per cent said they are better at developing and retaining skills and talent as against the global average of 60 per cent. Over half (56 per cent) cited developing and implementing innovations (both to products and services as well as ways of working) and 60 per cent said that they are more effective in applying the latest technology than others in the industry