Barclays lures SMEs with collateral free loans

NAIROBI, KENYA: Barclays Bank of Kenya (BBK) has launched a financing model that will see small businesses that supply goods and services to large corporates take loans without collateral.

Through the financing model dubbed 'Enterprise and supply Chain Development (ESD) program, small and medium size enterprises (SMEs) will only be required to prove existence of valid contract with established corporates to access credit.

According to James Agin, BBK Corporate and Investment Banking Director, the bank is shifting from the traditional lending proposition where SMEs were given money against physical collateral.

"ESD will be driven by visibility of cash flows. SMEs will only be required that they have contracts to supply goods and services to given companies. Once companies confirm this and we are satisfied of their ability to pay, we then lend to the SME," said Mr Agin.

This will help the SMEs to increase their ability to win supply tenders as corporates will be assured that BBK will provide the financing.

In return, the large corporates will only be required to acknowledge the existence of contract to supply but will not be responsible in any way if the SME defaults on paying the bank.