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.
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.