The Banker/IFAC Survey Shows Small Business Lending Holds Steady; Accountants Play Key Role in Lending Decisions
Oct 01, 2009 | New York | English
Some small and medium-sized enterprises (SMEs) may have access to more credit down the road, but will have to pass more rigorous tests to demonstrate their creditworthiness, according to the findings of a global survey of banks conducted by The Banker magazine in association with the International Federation of Accountants (IFAC). The survey results, released today in a supplement on supporting small and medium-sized companies in the October issue of The Banker, also confirmed the critical role that accountants play in providing information that influences lender decision making. Some small and medium-sized enterprises (SMEs) may have access to more credit down the road, but will have to pass more rigorous tests to demonstrate their creditworthiness, according to the findings of a global survey of banks conducted by The Banker magazine in association with the International Federation of Accountants (IFAC). The survey results, released today in a supplement on supporting small and medium-sized companies in the October issue of The Banker, also confirmed the critical role that accountants play in providing information that influences lender decision making.
"Accountants have a long-standing history as the trusted advisors for SMEs. To continue to fulfill this role, accountants should be proactive in advising their SME clients about lending options and requirements," states IFAC Chief Executive Officer Ian Ball. "The survey results provide useful information to assist both accountants and SMEs."
The survey showed that over 20 percent of the more than 350 bankers who answered questions about the future indicated that they would raise the number of new loans and increase loan amounts to existing SME clients over the next two years. Very few respondents, just 2 percent, said they would restrict loans to SMEs. However, bankers expect SMEs to provide more comprehensive information in their loan applications. Survey respondents indicated that they will increasingly look at cash-flow information, collateral, and customer history with the bank when considering loan applications. Financial statements, key risk indicators, and industry trends are also among the key information banks are focused on when making loan decisions.
Lenders also highly value audited financial statements. Two-thirds of the respondents indicated that their lending policies require some form of assurance on the entity's financial statements from an external accountant, and audited financial statements are preferred by most respondents. In addition, another 60 percent of respondents said that accountant involvement in an SME's business would significantly and positively influence their lending decisions.
"IFAC is dedicated to helping accounting firms meet the assurance and other needs of the small business community," emphasizes IFAC President Robert Bunting. "We will also continue to take the pulse of the SME community through our outreach initiatives, particularly those of our Small and Medium Practices Committee."
Brian Caplen, editor of The Banker, says: "It was very exciting to work with IFAC on this project. The health of the small and medium-sized business sector is critical to the global economy and it is very important for banks to understand their needs. We hope that the survey leads to a better understanding between banks and their clients."
About the Survey
The online survey was conducted by The Banker between August 21 and September 15, 2009. Over 500 bankers responded to the survey; there were 146 complete responses, and the remainder was partial responses. The survey sample included banks in over 80 countries. The banks ranged in size from those with total assets of under US$100 million to over US$100,000 million. To view the survey results, go to www.ifac.org/financial-crisis/smp-sme-resources.php or see the October issue of The Banker.
IFAC (www.ifac.org), the global organization for the accountancy profession with 157 members and associates in 123 countries, promotes the adoption and implementation of international standards and develops guidance to foster high-quality practice by professional accountants working in business, public practice, government, and education.
About The Banker
The Banker is the monthly magazine of the international banking and finance industry. Part of the Financial Times group, The Banker has navigated its way through 83 years of banking coverage from the Wall Street Crash of 1929 to the financial crisis of 2008 with the same reputation for accuracy, authority and integrity. Read in more than 100 countries around the world, The Banker delivers unique insights and analysis to the world's leading CEOs, CFOs, CIOs, Corporate Treasurers and Central Bank Governors.