In this interview, WesBank’s general manager for its corporate division, Gerald Burton, talks about asset financing and how it differs from a  normal bank loan.

Prosper and a bigger competitor based a few blocks away, Lending Club Corp., dominate an obscure corner of the financial-services sector called "peer-to-peer" lending, in which consumers bypass banks altogether to borrow money from other individuals. It is part of a shadow-lending system that has thrived since the 2008 financial crisis caused many banks to tighten their credit standards.There are, of course, plenty of would-be borrowers. Lately, however, there has been even greater interest from lenders—mostly individual investors so starved for high yields that they are jumping to fund unsecured, high-interest-rate loans. Even some investment funds are getting into the game, snapping up entire loans before individual investors act. 

in case you haven't seen it already, this week's Economist has quite a useful article on the emerging importance of financial technology  companies - which they affectionately title "Revenge of the Nerds:  An Explosion of Start-Ups Is Changing Finance for the Better" ... see attached link.  welcome comments! matt

Lawrence Marsiello, Managing Director – Pine Brook and former Vice Chairman and Chief Lending Officer of the CIT Group discusses how banks can benefit from entering the equipment finance and leasing market, but acknowledging the uniqueness of the field is critical to success.

I just came across a March 2012 publication on our website from the African Development Bank (perhaps we linked to this only recently?)...Bank Financing to Small and Medium Enterprises in East Africa:  Findings of a Survey in Kenya, Tanzania, Uganda and Zambia, by Pietro Calice, Victor Chando and Sofiane Sekloua.  Good read...only 23 pages (main text), and lots of interesting findings.  some 16 banks were interviewed, four in each country.  Some of my main take-aways:

1.  as always, the definition of SME varies widely - but it's interesting to note that most of the banks use loan size and turnover, not employee numbers.

2.  while all the banks say SMEs are important, in almost all cases their SME units are not "at par" with either the retail/consumer banking or the commercial/business banking units.  This is despite many of the banks having more than one third of their total lending exposure in SMEs. 

3.  not surprisingly, the banks consider information access the key problem in growing their SME business...

4.  the banks are very dependent on physical branches and the "shoe leather" approach for business development.  but they are automating risk management.  however, both credit risk undewriting and portfolio management still is mostly manual..

5.  unfortunately the discussion of collateral requirements didn't distinguish between movable and immovable collateral. 

lots more detail within...see the link to read the whole report!

matt

Today's businesses have a lot of options when it comes to accepting mobile payments. But most of these options have something in common: they all involve hefty credit card processing fees.Are mobile payments really just a new way of accepting the same old credit cards? Or does mobile technology have something more innovative to offer the business world?Here are five mobile payment apps that don't come loaded with processing fees. They may not be the tools that everyone is talking about right now, but these apps could be the ones to transform the way businesses and customers interact in today's mobile world.Read more: http://smallbusiness.foxbusiness.com/finance-accounting/2013/06/10/5-mobile-payment-apps-for-small-business/#ixzz2ajXy4dXE

USAID’s Microenterprise and Private Enterprise Promotion Office (MPEP) hosted the seminar “New Insights on Lending to Women-Owned SMEs: USAID’s Credit Guarantees and Technical Assistance” June 12 as part of the Growing Economies Through Women’s Entrepreneurship series. The seminar was an opportunity for practitioners, researchers and other donors to learn about new data analysis regarding loans to women-owned small and medium enterprises (SMEs) through USAID’s Office of Development Credit (DCA) programs. USAID/DCA Africa Team Leader Anthony Cotton began by introducing the DCA program, and then independent consultants Lara Storm and Heather Kipnis presented their findings from their research using the DCA SME portfolio. Anastasia de Santos, economist with USAID/MPEP moderated the event. During the two presentations, both consultants noted constraints affecting women business owners and identified recommendations for future DCA programming.

A new paper by Ajay Agrawal, Avi Goldfarb and Christian Catalini of the University of Toronto seeks to understand how crowdfunding disrupts the typical pattern for early stage financing.  Heretofore this was almost always done by local investors, countering information problems and the need for "high touch" support.  They discuss how "reputation signalling", rules and regulations, and "crowd due diligence" all help overcome assymmetric information barriers between entrepreneurs and funders, and control opportunistic behavior by entrepreneurs after they raise capital.  A "provisioning point mechanism", where funds aren't liberated for the entrepreneur until the pre-set target is achieved, avoids the free-rider problem. So crowdfunding could challenge the "hub" pattern that has characterized much early stage investment to date (Silicon Valley, etc) - though it's early to say, as the authors note, as true equity crowdfunding is still quite rare.The authors feel that certain types of ventures are more likely to benefit from crowdfunding, such as consumer products where the value proposition can be easily communicated via text and video (see CircleUp's operation for a good example here, and Proctor and Gamble already has bought a stake in this outfit).  They also note that the data trail being created by crowdfunding platforms will yield new "big data" opportunities to refine both risk management and policy development in this field. Lots of useful data on Kickstarter's history also in this piece. 

see the link to a new working paper for the National Bureau for Economic Research from Michael Ewens of Carnegie Mellon and Matthew Rhodes-Kropf of Harvard Business School.  they suggest that individual partners' human capital is 2 to 5 times more valuable than the VC firm's organizational capital in explaining investment performance.  they focus in particular on skill transfer and exit styles.  the authors also suggest that this is why VC firms tend to cap investment at about a few hundred million dollars of assets under management, as over that size it's too much demand on partners' time.  they also note this is why we see few mergers and acquisitions between VC firms.further comments welcome...paper is available for free, following the link below.matt

Bank Alfalah is one of Pakistan's top five banks by asset size. It is also the first bank in Pakistan to have focused on the SME sector in 2002. However, over the years the bank gradually withdrew from this sector, mainly owing to the absence of the requisite skills, procedures and policies to bank SMEs profitably.