2.5.4. Matchmaking between Finance Seekers and Providers through Forums and Events
Matchmaking platforms are designed to connect finance providers with firms needing investments (typically SMEs) and provide resources to facilitate transactions while not becoming a party in those transactions (Source: Mobilizing Private Finance for Development: A Comprehensive Introduction).
- Ability to find borrowers in target sector/region
- Availability of suitable training for the needs of target sector/region
- Burden of banking/finance regulations and supervision
- Sufficient understanding of target sector/region and the needs of borrowers in target sector/region to make lending decisions
- Transaction costs associated with originating and managing loans to target sector/region
MUST HAVE’S, CRITICAL POINTS, OR QUESTIONS TO CONSIDER
One of the key obstacles in access to finance for SMEs is their difficulty in approaching financial sources and applying for investment or credit. Most are not able to prepare the sophisticated business plans and financial projections that lenders and investors need, because they are not financial professionals – they are entrepreneurs.
The Sarajevo Mission initiated a “Qualified Business Financial Consultant” (QBFC) program through the Fostering Interventions for Rapid Market Advancement (FIRMA) Project (2009-2015). FIRMA recruited a group of 30 local professionals, all with experience in business consulting, and “qualified” them in a week-long training focused on business plan preparation and financial projection. Subsequently, when the project identified a beneficiary in its light manufacturing sector that needed growth finance, it assigned one of these “QBFCs” to assist it in developing a fully competent application for credit, identifying a suitable source of finance, and accompanying the firm to the lender or investor to advocate for the financing.
These QBFCs were paid a fixed amount by the project on a purely success fee basis, when loan funds were actually transferred into the beneficiary’s account. The project organized periodic networking events between bank loan officers and QBFCs, so that they would come to know and trust each other. At a cost of no more than $150,000 ($70,000 to oversee the program and $80,000 paid to QBFIs), this initiative succeeded in stimulating $25 million in bank credit to over 50 Bosnian SMEs.