Crimson Capital News Details

August, 2009

Crimson Capital Assists South African Bank Develop Two New SME Loan Products

Crimson recently provided assistance to a major South African bank in developing two new loan products designed specifically for the SME market. Work was conducted as part of the USAID-funded Southern African Financial Sector Program.

The first of these two new SME loan products, Vendor Finance, will provide much-needed working capital to the SME market. Through the Vendor Finance product, the Bank will provide financing to the SME borrower against purchase orders that the borrower has with its customers, thus providing the SME borrower with the financing needed to fill existing orders. The second product, Invoice Clearing, will help SMEs finance the collection portion of their cash flow needs. The Bank will provide financing to the SME borrower against invoices to its customers, thus accelerating the collection phase of the SME’s needs and providing the SME borrower with financing needed to fill future orders.

Both products address a significant underserved niche in the market and will have substantial economic benefits for SMEs and their customers. The two products will also enhance the Bank’s penetration of the SME market, allow for cross selling of products to SMEs and corporate clients and improve tiering with the Bank’s existing accounts.